Borrowing from someone you know is vastly different to borrowing from a bank, credit card company or other commercial lender. The relationship is the centre of the transaction. To make the loan a success, financial and emotional considerations have to be balanced.
The following 10 tips are designed with the single objective, to prevent friction between the parties throughout all phases – considering a loan, setting up a loan and its management till its repaid or forgiven.
Its been our experience that a considered process can often lead to a loan NOT being set up, and that is as good an outcome as the alternative. Openness, transparency, communication, detail and fairness are the elements that make lending between friends and family a success.