Family and Friend Funding 2

The clear difference on family and friend funding bothers on other funding sources other than earlier discussed. What differentiate it is the information, and the misunderstanding about what the ‘deal’ as it the process sometime in giving and receiving lack, to some extend the actual in-depth conversation with regards to what the money given and received stands for, because of the intimacy. This is a situation where amount given as loan may be misinterpreted or misunderstood as, gift, donation or equity contribution. That is why it is necessary and recommended to have a one-page document signed by both parties to describe and disclose the actual nature of the funding, expectations and commitment of both parties, where the interest rate and repayment terms  are clearly stated. As you may know that in business, you will need to take a tax deduction for the interest expenses etc.

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