Subscribe to Entrepreneur for $5

Tapping Friends and Family for Startup Funds

Make sure you cover your bases before accepting a loan or investment from a friend or family member.

This story appears in the October 2009 issue of Start Up.

Q: I'm planning to start a retail boutique. I have some savings but not nearly enough to get the off the ground, and my isn't good enough to get a loan from any local banks. A favorite uncle has offered to give me some money to help me get started. Do I have to do anything "legal," or is it OK to just take the money?

A: With the in the grips of a major recession and , many entrepreneurs have little choice but to tap friends and family members for their startup capital. But that doesn't mean you should treat them like "friends and family."

Continue reading this article - and everything on Entrepreneur!

Become a member to get unlimited access and support the voices you want to hear more from. Get full access to Entrepreneur for just $5.

Entrepreneur Editors' Picks