A close family member has asked to loan money for a start-up?

ukchriss

Aprox 10 years ago I lent my daughter all my savings of 9,000 to pay all her debts, she agreed to pay back £150 a month...

I never even got one payment back and we havnt spoken for about 9 years.

She now has a well paid job, drives a brand new car and has at least 2 holidays abroad each year while i struggle to make ends meet.

So no, NEVER EVER lend to friends or FAMILY!

Oh and if you have any money to spare, i could do with a loan!

LovelyLeeds

amaze wrote: »

Hi

... happy to do so if I think the business will be successful after reading the business plan.

I am not looking to make interest on this as I am doing it as a favour,

Find this a bit odd, that you are willing to hand over tens of thousands of pounds if you deem the business plan will be successful (ie make profits) - yet you are doing this as a favour and don't want any return apart from your original stake.

I know interest rates for savers are low at the moment, but you are seriously selling yourself short if you are doing this for love and love alone! I'm not trying to be flippant here, but you are in major danger of losing your tens of thousands of pounds - without a penny of interest to boot!

Please read the lending to family/friends thread - it will make very sober reading.

LovelyLeeds

ukchriss wrote: »

Aprox 10 years ago I lent my daughter all my savings

A horrible tale ukchriss. It might be worth re-posting your post in the lending to family/friends thread - the more we can evidence just how disastrous it is to help people you thought you knew and trusted, the better.

macman

You can't 'secure it to the business' in any other way, because the business may well fail. Unless you secure it against another tangible personal asset such as property (which is what the bank will do), then you have to accept the possibility that you will lose the lot. If that's a risk that you are prepared to take, then go ahead.
You (and your family member) appear to have given no thought as to how and over what period the loan would be paid back.
Unless this is properly contracted then you are certain to fall out over this.

DCFC79

ukchriss wrote: »

Aprox 10 years ago I lent my daughter all my savings of 9,000 to pay all her debts, she agreed to pay back £150 a month...

I never even got one payment back and we havnt spoken for about 9 years.

She now has a well paid job, drives a brand new car and has at least 2 holidays abroad each year while i struggle to make ends meet.

So no, NEVER EVER lend to friends or FAMILY!

Oh and if you have any money to spare, i could do with a loan!

thats just out of order,

geoffky

stop..look..listen....then run a mile..

Wobblydeb

I'm not going to say that lending money to start-ups is a bad idea. It makes some investors a heck of a lot of money.

However those investors either get lucky .... or .... they have lots of experience and (usually) a portfolio of investments. They plan on having a mix of winners and losers.

From what you've written you don't appear to have an investing background ...... no knowledge of the level of risk you're taking, the right return you should be expecting for that risk, and the type of paperwork you should be insisting on to minimise those risks and ensure you get the appropriate return.

If you want to treat this as a professional investment you can get support with those kind of issues from lawyers and accountants, but it will cost you. And it will not remove the risk that you have picked a loser and your money never gets returned.

p.s. Dragon's Den doesn't just show you the tip of the iceberg on what is done for these guys to make an investment. It is a snowflake on the tip of the iceberg. There will be many hours of research, forecasting, analysis legals and due diligence before that money is genuinely handed over. That is not even counting the years of experience in their respective fields they have built up before sitting in those chairs.

immoral_angeluk

To summarise the pros cons...

Pros - you could get your money back and keep your friend, happy in the knowledge you've given them a leg up in their new successful business(it doesn't sound like you want any type of gain from the business)

Cons - you could lose your friend and your money


I know which one I'd choose personally. Then again I don't have the money to lose and value my friendships too much.

whitewing

I also say don't do it, without even knowing what the business is.

We were in Exeter City Centre today and some of the high street stores for well-established brands are closing down. I take this as a sign to still be cautious.

DCFC79

What is this business idea the close family member has, he may be close but will he repay the money when asked.