I want to ask my friends and family to help me financially with my travel business for six months. How do I prepare a formal request?
I need cash to keep my business afloat. This is just for a six-month period.Any time someone agrees to provide you with a loan, it should be documented in writing. This is especially so when it comes to family and friends. Otherwise, without something in writing, the loan may be perceived as a gift, in which case both you and your "lender" could miss out on some valuable tax advantages.
You want to be very clear about the amount you're requesting, when you intend to start paying the loan back and the interest rate you'll pay. You also need to be very clear about what happens if you default on the loan.
Speak to an attorney to make sure you have the right legal language in the document. It's not just the money that's at stake--it's your personal relationship, too.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.