Financing Center - Borrowing From Friends and Family

Borrowing from friends and family is common among new entrepreneurs. Since money is so hard to come by when you do not have a business track record, that is a good option if your family or friends can help you. Many entrepreneurs have started that way: one of the most notorious is Sir Richard Branson, founder of Virgin Records, who did just that. Money borrowed from his aunt allowed him to keep his recording studio going until it became profitable. Although there is always a risk factor of alienating your friend/family lenders if your venture is not successful, it is possible to take certain precautions to make everyone comfortable with the process. To that effect, Sir Richard Branson has created an interesting initiative to formalize friend/family lending. It is called VirginMoney. This initiative originates from the lending circle principle (read about it on next page). Virgin actually bought a lending circle company and transformed it for this venture.

What VirginMoney does is manage the loan and provide the necessary tools, documentation and recommendations for the loan to become official and even provide certain tax benefits. VirginMoney does offers some levels of financing but not for small business loans, only on mortgages. However, hey have interesting tools on their Web site, such as a Savings Calculator, a Payment Calculator, an Applicable Federal Rates and a Rate Limits Guide per state. They also have an interesting business guide titled "A Guide to Business Builder" in PDF format, that you can download from their site for free. Ths guide contains plenty of ideas for financing your business.

When use VirginMoney's services, you will get a 15% rebate on their fee ($199) by mentioning that you saw this on WhizVentures.com. We negotiated this new arrangement with Mr. Spicer on May 20, 2009.

In that regard, friend/family lending presents many advantages. For instance, rates can be determined with a lot more flexibility and you can get a better rate than you would get from the bank. The interest paid stays in the family/friends circle, instead of going to banks. When we know what the bank usually take as their cut on loans, that is a lot of money. Also, it s a lot easier to negotiate in case of unexpected problems. Find out more about it by visiting their Web site. On the next page, we discuss more traditional lending circles.

Please note that none of the following networks have been tested. If you have any feedback to give about them,

VirginMoney Business Loan Management Payment Calculator	Lending Circles Banks	List of Angel Networks U.S.A.	List of Angel Networks International	Other potential sources of money: National PayDay

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