{"id":5195,"date":"2016-04-04T10:47:58","date_gmt":"2016-04-04T15:47:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/starting-a-business\/getting-money-from-family-and-friends-for-a-business.html"},"modified":"2026-05-12T19:03:00","modified_gmt":"2026-05-13T00:03:00","slug":"getting-money-from-family-and-friends-for-a-business","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/getting-money-from-family-and-friends-for-a-business.html","title":{"rendered":"Getting Money From Family and Friends for a Business"},"content":{"rendered":"\n
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Getting Money From Family and Friends for a Business<\/h1>\n\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

A funding option for your business is borrowing from family and friends. This financing option offers more flexible payment terms, typically lower interest rates, no regard for credit scores, and minimal collateral requirements.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

You can\u00a0finance your new business<\/span><\/a>\u00a0in many different ways: a bank business loan<\/span>, angel investors<\/span>,\u00a0venture capital funding<\/a>, or even\u00a0crowdfunding<\/span><\/a>. But if you\u2019ve tapped out the traditional methods, including your savings, retirement accounts, and the equity in your home, obtaining money from family and friends is a great way to get or keep a business going.<\/p>\n

It\u2019s common for small <\/span>business<\/span> owners<\/span> to start up<\/span> a business by using funds from lenders<\/span> like family and friends. Borrowing money<\/span> from family and friends or giving them an equity interest in the company is much easier than obtaining funding from a bank.<\/p>\n

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Benefits of Borrowing Money<\/span> From Family and Friends<\/h2>\n

Unlike a bank loan<\/span>, acquiring private money does not require filling out paperwork or waiting for the loan to go through. And it may be tough to obtain business financing<\/span> from traditional <\/span>lenders<\/span>. Entrepreneurs<\/span> who obtain financing from loved ones like friends and family gain several advantages.<\/p>\n