The fact is, many entrepreneurs have got their start this way leading to the founding of many well-known brands. With an $800 dollar loan from his family Berry Gordy Jr. started Motown Records. Walmart founder Sam Walton borrowed much more$20,000from his father-in-law to open his first store. John Mackey and Renee Lawson launched the popular Whole Foods store and brand with a $45,000 loan from family and friends back in 1978. Now, a Sunnyvale, California startup called TrustLeaf is attempting to simplify the method by which entrepreneurs can approach family and friends for loans, according to Small Business Trends . For a fee , depending upon the type and complexity of the campaign, TrustLeaf allows you to invite family and friends to pledge financial support for a business venture. The site says it offers standard online agreements for repayment of loans, then manages the loans and keeps track of repayments while tracking your progress. In a recent release, the company stated: Friend and family loans provide many potential advantages over traditional forms of investment. They may be available when other capital is not, are often cheaper, offer greater flexibility, and perhaps most importantly, represents validation from key supporters. Many entrepreneurs, however, hesitate to take out loans from friends and family, fearing that it may damage their relationship. The key to avoiding these potential problems is to manage personal loans responsibly, the company claims. TrustLeafs free Friends & Family Loans Guide is an ebook that recounts the examples of great entrepreneurs and great brands that got their start thanks to funding from family and friends. More importantly, it provides dos and donts on approaching family and friends about a business loan.
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How To Get A Family Loan To Start Your Business
Before during and after the lending process other parties may be involved too. For simplicities sake I’ll discuss the situation that is often applicable with small and medium sized companies that are not listed on a stock exchange. The process may be different depending on the business involved, the sector in which the business works, the money that is required and the bank itself. The Need For Small Business Loans The need to apply for a bank loan is usually the result of a loss a business is experiencing, replacement or planned investments in new machinery, construction or renovation of a building or the finance of business growth. This growth resulting in for instance an increase in accounts receivable that need to be financed by a third party. Normally the first reason, your business is running with a loss, is the most difficult one to get your loan rewarded by a bank. They must be convinced the loss is only temporary and the risk for the bank, in case of a collapse, is minimal.
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