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It's All Relative

You can ask your family to fork over funds, but make it worth their while.

This story appears in the May 2007 issue of Entrepreneur. Subscribe »

Question: I've been turned down for loans by several banks because my business is a startup and I have no experience in the industry I want to enter. Should I try asking relatives to lend me the money instead?

Answer: Borrowing money from family members can be a double-edged sword. On one hand, it's only natural for first-time entrepreneurs to seek funding from the people who have known them the longest and have the greatest motivation to see them succeed. Relatives are also generally more patient than banks, commercial lenders and professional investors when it comes to recouping their capital and making a return on their investment.

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