| Since starting a business can be overwhelming both | | | | allotted, what it will be used for, and how it will be paid |
| emotionally and financially, some people turn to outside | | | | off can help make borrowing the money much easier. |
| investors to help with start-up costs. While this may | | | | Once everyone is comfortable with the loan |
| seem like a good idea when you have a lean budget, | | | | agreement, it can be signed. It is important to adhere to |
| make sure everyone understands their role before | | | | payment schedules and other stipulations in the |
| you take any money. Because those who invest in | | | | documents so everyone will be happy with the |
| your business may want more of a say in the day to | | | | agreement. |
| day operations, limiting their power through official | | | | With the money you borrow, you will be able to start |
| documentation is the best way to start a business and | | | | your business. Depending on the type of business you |
| maintain it on your terms. | | | | want to start, you will have enough to buy equipment, |
| Since your outside investors will probably be family or | | | | materials, and pay for advertising and other expenses. |
| friends, you may feel more secure asking for their help | | | | Creating a budget in order to use the loan properly is |
| than taking out a loan. While most people are willing to | | | | also important. It may take some time before you start |
| lend you the money without trying to take over your | | | | generating a profit, so it is important to have enough to |
| business, but others will want to have a say in how | | | | purchase additional supplies if necessary. Once you |
| you spend it and even in how you structure your | | | | start generating a steady profit, you can begin to |
| business. Before accepting any loans, even from | | | | repay the loan and create another budget that takes |
| family or friends, you need to make it clear that they | | | | into consideration your new monthly income. |
| will not have any say in how your business is run. | | | | Before taking loans from outside investors, make sure |
| Depending on the amount of the loan, you should set | | | | everyone understands what their responsibilities are so |
| up a repayment schedule so you can quickly repay | | | | you don't end up having to give the loan back, repay it |
| the loan. This shows that you are reliable and worth | | | | early, or lose a friendship. While many investors have |
| investing in. | | | | the best intentions, they may overstep their boundaries |
| If you are borrowing a large sum of money from an | | | | and try to take over because they have a vested |
| outside investor, hiring a lawyer to create | | | | interest in the success of your business. |
| documentation that explains how the loan will be | | | | |