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 [Q] A close friend giving me a personal loan to start a biz View next topic
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Sornoso
Dud?


Joined: 18 Jan 2012
Posts: 1
Location: Thailand

[Q] A close friend giving me a personal loan to start a biz
PostPosted: Wed Jan 18, 2012 11:56 am Reply with quoteBack to top

My friend was recently informed that he will be receiving a large amount of inheritance money. I do not know how to ask or even if I should. I was the only one of his friends that he told about the inheritance. My friend called me right after he found out on NYE just a couple days ago while I was away. My friend told me because he trusts me and because I have been trustworthy with him in the past. We have known each other for about two years and currently have an apartment together. The business I have in mind is a project that I have been working on for over a year. It started while I was in an entrepreneurial program. I have a team of people that have helped me craft my business plan and think out the strategy and specifics as well as a handful of mentors and consultants who have volunteered their time to help me in the process. I am in the family and friends stage as far as funding and I have not been able to establish start up capital previously. I don't want my friend to think I'm being a mouch. I have two thoughts on how I am going to propose this to him which is where I need some guidance, advice, feedback. I would either ask him for a loan where I would pay him back the money I borrowed and then some interest. Or, I would ask if he would like to invest in exchange for equity. I hope for the best for the business, of course, but I know that it is a risk. It wouldn't be a guarantee that the business would take off. If he became an investor this may be more fair to him for the risk for reward factor. I also know this would need to be a formal agreement. Any advice or thoughts on this scenario? What would be the best thing to do?
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Aaron
A-Bomb


Joined: 24 Jan 2007
Posts: 824
Location: Atlanta, GA

Re: [Q] A close friend giving me a personal loan to start a biz
PostPosted: Wed Jan 18, 2012 4:49 pm Reply with quoteBack to top

Write up a business plan so you don't seem like a con artist.

Then introduce it like "well I was going to seek funding for this elsewhere but since you now have the means and you are my friend, I will give you first 'in'"...

-Aaron
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bdk
Wrecking crew


Joined: 24 Mar 2008
Posts: 1611
Location: Hell

Re: [Q] A close friend giving me a personal loan to start a biz
PostPosted: Wed Jan 18, 2012 8:10 pm Reply with quoteBack to top

dont do it never do business with friends or family... something WILL go wrong, life is not perfect, and you can say bye bye to the friendship

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Aaron
A-Bomb


Joined: 24 Jan 2007
Posts: 824
Location: Atlanta, GA

Re: [Q] A close friend giving me a personal loan to start a biz
PostPosted: Wed Jan 18, 2012 9:12 pm Reply with quoteBack to top

bdk wrote:
dont do it never do business with friends or family... something WILL go wrong, life is not perfect, and you can say bye bye to the friendship


That's silly. Who else is going to give you money besides friends and family?

...
... (in the middle of a depression, no less)...

...

Yeah, no one. So, do what you have to do. But make sure they understand there is no guarantee, and be ready to lose the friendship.
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AlderonIron
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Joined: 26 Jan 2012
Posts: 1

Re: [Q] A close friend giving me a personal loan to start a biz
PostPosted: Thu Jan 26, 2012 6:57 pm Reply with quoteBack to top

If your friend is looking to invest the money in other things I'd say go for it. If you just out of the blue say "Hey since you're getting money anyways... why not give it to me?" I don't know how to put that so as to not sound like a mooch.

If you are going to pitch a proposal for a loan/investment, you need to do it as a professional not just talking to your buddy. Treat your pitch to him as you would to an investor or a loans officer.

And as the previous posters said, be prepared to lose your friend if the deal goes south. Its very difficult for people to keep business and personal life seperate.
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