How To Make Your Family And Friends Your Investors Minimizing The Risks Of Personal Loans

How to​ Make Your Family And Friends Your Investors - Minimizing the​ Risks Of Personal Loans
Most people don’t realize that over half the​ businesses in​ America are financed by money from family and friends .​
The truth is​ everyone relies on​ their circles when they have nowhere else to​ go .​
Someone with mediocre credit may have a​ difficult time getting a​ start-up loan from a​ bank,​ but Mom and Dad will always help out if​ they can.
Weighing the​ Pros and Cons
There are inherent risks and advantages to​ getting a​ private loan over a​ bank loan:
Risks:
• Not clarifying both parties’ expectations .​
If you​ don’t have a​ clear repayment plan and stick to​ it,​ it’s very easy to​ get behind or​ to​ never set the​ money aside to​ pay off the​ lump sum.
• Relationships can be damaged when money gets involved .​
Your lender can resent feeling used or​ taken advantage of​ if​ you​ default .​
And either party can get hurt if​ they feel the​ money is​ being valued over the​ relationship.
Advantages:
• Flexible terms—typically the​ repayment doesn’t start immediately,​ and you​ can create a​ payment schedule that works for both you​ and your lender.
• Better interest rates—This is​ particularly true if​ your alternative is​ credit card financing .​
And with most start-up businesses,​ banks are probably going to​ steer you​ in​ that direction.
Show Them you​ Mean Business—Getting Outside Help
Loan administration companies minimize the​ risks involved in​ private loans by creating legal documents and administering repayments .​
By approaching your friends or​ family with a​ legal agreement for you​ both to​ sign,​ you​ can help allay some of​ their fears .​
Says Asheesh Advani,​ president and CEO of​ CircleLending.com,​ the​ more you​ do to​ reassure them you​ have a​ plan in​ case you​ can’t make a​ payment,​ the​ more they feel that you’ve thought this through and that the​ relationship will survive the​ transaction.
If something should come up,​ and you​ know you’re going to​ be unable to​ make a​ payment,​ you​ can go to​ your loan administrator ahead of​ time .​
With the​ permission of​ your private lender,​ they’ll spread your missed payment over the​ life of​ the​ loan .​
Or they’ll restructure the​ loan and lower your payments .​
But they’ll help work out an​ arrangement where you​ both feel comfortable.
A major benefit of​ having a​ loan administrator is​ the​ security it​ gives your investors that your loan will stay on​ track .​
Each month,​ the​ loan servicing company moves the​ money from your account to​ your lender’s account by direct debit and direct deposit .​
This way,​ there’s no chance you’ll be out of​ town and forget,​ or​ be late with,​ a​ payment .​
Says Advani,​ It’s a​ great way to​ not find yourself in​ a​ hole.
How To Make Your Family And Friends Your Investors Minimizing The Risks Of Personal Loans How To Make Your Family And Friends Your Investors Minimizing The Risks
Of Personal Loans Reviewed by Henda Yesti on August 08, 2018 Rating: 5

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