What are the pros and cons of accepting startup capital from a family member?
PROS – very accessible – fast and easiest way to get start up capital – you don’t need to prepare a comprehensive business plan (e.g. you don’t have a buy a business plan software or writer) – no voluminous paperwork required such as banks or SBA loans – no collateral required – no credit checking; even if your credit history is poor, you can still get startup capital – it feels good to know that your family is behind your decision to start a business and supportive of your endeavors; they are investing in YOU, not necessarily your business idea – interest, if any, can be lower (sometimes, there’s no interest!) – unlike banks that typically shy away from companies without a proven track record or assets to guarantee the loan, family members can give you loan even if you know nothing about the business – will give you money even if they think return on investment is not sizeable (venture capitalists will not give money if expected ROI is too miniscule) – will not require you to put your
