Growing your business takes a lot of time, energy and resources. For most businesses, the most prominent “resource” that they use is money. And often times, the quickest way to increase resources and revenue is through loans. Loans can come from a variety of different sources: banks, family, friends and small business funding companies like Smart Business Funding.
Banks and financial companies that provide business loans know the finances inside and out, but how do you know if it’s worth taking a business loan from your in laws and family?
There are pros and cons to taking any kind of loan, which is why it’s important to evaluate whether or not you should even accept a loan from anyone that is not financially instituted to provide financial advice and funding.
Benefits of Family Loans
The most significant benefit of receiving a family loans is that your business is getting funded. If another financial institution refuses to give you the funding you need, a family loan may be better than no loan in some cases. If you need a quick infusion of cash but can’t find it anywhere else, a family loan may be the financing you need for your business to get through an emergency.
Cons of Family Loans
Mixing money and family can be a dangerous venture for any business owner. Loans received from family are often not done with specific agreements that other financial institutions will have curated. This means that it’s more likely that a dispute will arise as a result of a misunderstanding of how repayment is going to be made and how soon.
When there are financial issues arising as a result of the loan, it can put a tremendous strain on the relationship of you and your family members. This is why it’s not generally recommended to receive a loan from a family member unless you know them very well, can establish an agreement, or are in a very desperate need of funding to save your business.
If you need a trustworthy source of business funding, give us a call or send us a message today at Smart Business Funding.