4 Rules for Borrowing Money from Family over the Holidays

As an entrepreneur, this holiday season might not be just about giving. You are launching your business and you need to ask your family for money to make your dream a reality. There is no faster way to ruin a family get-together than by asking for money irresponsibly. Whether you are just starting your business or need an injection of capital to keep you up and running, it is crucial that you come prepared.

Here are a few guidelines to ensure that you will raise your cash and be invited back for New Years.

1. Not at the Dinner Table: There are three things you never talk about at the dinner table: politics, religion and money. While there is some value in a little social pressure, putting one of your family members on the spot is stressful for everyone in the room. Instead, try initiating the conversation in a more personal setting. Take a walk and explain that you are aiming to finish your fundraising in January and you would love to have them on board. Having conversations in a calm atmosphere will increase your chances of getting a ‘yes’.

1. People Like Pictures — Whether you are asking Aunt Mary for $500 to fund your dog-sitting business or raising $50k for a real estate down payment, it is crucial to show them, don’t just tell them, how the money will be used. Have some photos (whether printed or on your cell) to show them what you’ll be spending their money on. If it’s intangible, like labor, you should still show pictures of your business in general.
2. Clear repayment terms — “I’ll pay you back” is NOT going to cut it. Super complicated repayment terms can be just as bad. Keep it simple. For example, “Complete payback with monthly payments over 18 months, along with 7% interest.”
3. Show appreciation — What can you offer your family in exchange for their support? Consider giving them a better return on their money than they might find elsewhere. Additionally, be sure to keep them up to speed on what you are doing. It is important for them to get something in return- whether it’s a favorable interest rate or something less tangible, like influence in your new business. Most importantly, make sure they are first on your Christmas list.

Asking for money is always difficult, especially during the holidays. Doing it the right way can make it a more jolly experience for everyone.

Happy Holidays from TrustLeaf.com!

Originally published at blog.trustleaf.com on December 1, 2014.