One viable funding option is to get your friends and family to invest in your business. Before requesting assistance, decide if you are requesting a loan from friends and family, or offering a share of your business. A loan requires repayment over time, while a direct investor takes an active role in your business decisions.
If the investment is structured like a business loan, you can use existing services to formalize the agreement, streamline the payments, and make the tax returns simple. These formal agreements protect your friends’ and family’s investments in your business. It is important to develop a repayment plan that includes how you will use the funds, your business plan, how progress will be measured, and how the repayment will be made.
Funds received from friends and family can be used for any purpose. If you draw up a contract, be sure to follow any guidelines included in the document.