The Pros and Cons of Cosh Loons From Family 



Family loans are oneof the most 

 widely tapped financial re- 

 sources in small business start- 

 ups. So why hesitate when your 

 father offers you a $50,000 

 "loan" for your new shop? By 

 accepting the money you avoid having 

 to fill out lengthy bank application 

 forms, bypass credit checks and can 

 receive the money almost instantly. 

 Regardless of what your father says, 

 there are strings attached to the loan. 



"Beware of this magnanimous, 

 loving, but ill-conceived offer," advised 

 a recent article on family loans in En- 

 trepreneurial Woman. "As those who 

 have borrowed money from relatives 

 know, a family transaction is more than 

 a banking deal. The interest due is not 

 financial but emotional; and what you 

 risk is not collateral, but the relation- 

 ship itself." 



Before asking for or accepting 

 money from any family member, ask 

 yourself the following questions, the 

 magazine advised: 



• Have you and the intended lender 

 ever argued about money in the past? 



• Have you ever felt uncomfortable 

 discussing finances with this person? 



• Do you ever sense an underlying 

 dishke, guilt or competition in your re- 



lationship with this person'.' 



• Do you feel that this person wants 

 to control you? 



• Do you have a less-than-perfect 

 relationship with the prospective lender? 



According to the article, even one 

 "yes" response to these questions indi- 

 cates that borrowing money could strain 

 the relationship and make family gath- 

 erings unpleasant for everyone. Failure 

 to repay the loan promptly could also 

 put the lender in dire financial straits, so 

 be sure he or she can afford to lend the 

 money. 



Finally, ask yourself how compat- 

 ible you are with your prospective 

 lender. Would there be a shouting match 

 if your relative entered your shop and 

 found you throwing away the paper 

 clips you receive with correspondence? 

 What if he or she found out you pre- 

 ferred a slightly more expensive grow- 

 ing medium? Or that you were experi- 

 menting with different, less market- 

 proven crops? 



If, after answering all these ques- 

 tions you still think accepting a loan 

 from a relative is a smart move, go 

 ahead. "Among family members who 

 care about one another, there is great 

 joy in being able to help each other 

 build dreams, " the article reported. 



"And because business loans can be 

 profitable for lenders as well as good 

 for borrowers, family loans will always 

 be an option." 



Once you've decided to accept a 

 relative's offer of money, draw up a 

 written agreement which spells out all 

 the terms of the transaction. 



Be sure to include: 



When interest is due. (Monthly? 

 Yearly? At the end of the loan period?) 

 When the loan should be repaid (When- 

 ever the borrower is able to repay it? At 

 stated intervals? At the end of the loan 

 period?) 



What you will do in case you're 

 unable to repay the loan. (What are 

 some alternative solutions the lender 

 can pursue to retrieve all or part of the 

 investment should your business fail?) 



What will happen to the out- 

 standing loan if the relative dies? 

 (Will it be terminated? Should you 

 continue to make payments to the per- 

 son's estate?) 



For more information on family busi- 

 ness matters, contact the Family Busi- 

 ness Center, Cleveland, at 216-752- 

 7970. It has resource materials and 

 advisors with whom you may discuss 

 family business problems. 



NORTHERN NURSERIES 



WHOLESALE HORTICULTURAL DISTRIBUTION CENTERS 



U.S. Route 5 • White River Junction, VT 05001 

 16 Pinkham Road West • Harrington, NH 03825 



SERVING THE PROFESSIONAL 



WITH ABOVE GROUND PLANT MATERIAL 



Distributors in the following lines: 



• Lofts Seeds 



• DeWitt Weed Barrier 



• Corona Hand Tools 



• Earthway Spreaders 



Birchmeier Sprayers 



Lebanon Turf Fertilizers 



Mulch & Grow Hydroseeding Fiber 



Nursery & Landscape Supplies 



lies > 



Contact: >'^i? 



Jim Babb, Mgr. • White River Junction, VT • (802) 295-2117 

 Bruce Fuller, Mgr. • Barrington, NH • (603) 868-7172 



GOOD SERVICE • DEPENDABLE QUALITY • CONVENIENT LOCATION 



