Capital Loans from Friends for Your Business

A classic problem for those who are pioneering and trying to start a business is to is to find capital – there are no business opportunities available without this capital, which must be available from the start of the business, to fund and to grow it.

 

However, the banks are not the only source of loans for working capital, Outside there are still other sources of funding that can be utilised. The easiest is to utilise a network of friends or family.

 

Many of us know business entrepreneurs who originally pioneered the business through loans from friends. They were not reluctant to apply for a loan or owe to the bank, it is just that the process of acquiring capital through friends was faster and easier.

 

Just imagine if they were looking for a loan to the bank. They first have to deal with the banking bureaucracy, meeting various requirements demanded by the banks. Quite often mortgaged assets must already be held in order to get credit from them.

 

You could look for investor capital, especially if you feel that you have a good business proposal. This option is also quite troublesome. Investors not only need to know every detail of the proposed business plan, but will want to be involved in the business. In short, investors must wait before they loan to the business as they need to build trust in you and confidence in the business. This takes time, unfortunately.

 

This is a big difference from borrowing from close friends. Because they already know and understand each other, trust is easily given. Practical too, as borrowing from them obviously saves you from having to go through the process of convoluted bureaucracy.

 

Still, there are ethics that must be upheld when looking for a loan from a nearby colleague. The main thing is to discuss the risks of the business. Act on transparency and honesty here. This step aims to maintain their trust principles. If necessary, legally make an agreement with terms and conditions that are not detrimental to a friend.

 

If necessary, ask them to get involved in the business. That way they can find out more of the intricacies of the business to be undertaken. From this it can be seen how social networking is also important in the process of starting a business. A strong network of friends can be an important capital to sustain the business plan to be successful and move forward.