Launching a small business isn't easy even in the best of times, and with the credit crunch, getting to opening day can seem near-impossible. And if you've got no collateral or poor credit, qualifying for a traditional bank loan will be an uphill battle at best. But you don't have to go straight to a traditional lender to find the investment cash you need.

With Business Loans from Family & Friends, you'll get the inside details on how you can take advantage of an area of lending that accounts for more than 50% of all business start-up investment money. And, if you've already identified a potential investor, this resource will help you structure the deal so that everyone understands the details and no one gets hurt, all while staying within the law.

Business Loans from Family & Friends shows you how to approach potential lenders and present a professional loan request, and will help guide you toward an agreement that will protect both sides. You'll get complete instructions for drawing up the paperwork to formalize your loan agreement, with all forms available on CD, including:

• loan proposal letter
• letter of intent
• personal financial statement
• promissory note
  

Written by Asheesh Advani, founder of CircleLending (now Virgin Money) and a pioneer in the business of managing person-to-person loans, Business Loans from Family & Friends offers you a smart way to keep family money within the family.

• Best Bets List
• Start-Up Costs Worksheet
• Recurring Costs Worksheet
• Collateral List
• Loan Request Letter
• Promissory Note (for an amortized loan)
• Promissory Note (for a graduated loan)
• Promissory Note (for a seasonal loan)
• Promissory Note (for an interest-only loan)
• Promissory Note Modifications for a Loan to a Business
• Promissory Note Modifications for Signature by Notary Public
• Security Agreement
• UCC Financing Statement
• Loan Log
• Gift Letter: Basic
• Gift Letter: Loan Repayment Forgiveness

1. Why Raising Money From Family and Friends Is for You and Yours

• What’s in It for You, the Entrepreneur?
• What’s in It for Your Family and Friend Lenders?
• Mixing Money and Relationships Can Work

2. Checking Out All Your Financing Options

• Your Choices for Small Business Financing
• Minimizing the Amount You Need
• Tapping Into Your Own Resources
• Connecting With a Bank or Other Institutional Lender
• Small Business Administration (SBA) Loan Programs
• How to Check Out Social Lending Networks
• Equity Financing and Angel Investors
• How Business Advisers and Mentors Can Help With Your Financing

3 Basic Legal and Tax Issues of Business Loans From Family and Friends

• Your Obligations When Accepting a Business Loan
• Tax Implications of Your Choice of Capital
• How Your Business’ Legal Structure Can Affect Your Fundraising Efforts

4 Deciding Who to Ask for Money

• Brainstorming a List of Prospects
• Narrowing Your List
• Creating Your Best Bets List

5 Preparing Your Business Plan and Your Fundraising Request

• Preparing Your Business Plan
• Calculating the Amount of Your Business Loan Request
• Dividing Up Your Request Among Prospects
• Putting It All Together

6 Deciding Interest Rate, Repayment Schedule, and Other Loan Terms

• Will You Offer Collateral?
• How Much Interest Are You Willing to Pay?
• When and How Do You Want to Repay?
• How to Figure Out Your Payment Amount
• What Are Your Options as to Payment Logistics?

7 Drafting a Loan Request Letter

• What to Include in a Loan Request Letter
• Using the Sample Loan Request Letter as Your Guide
• What’s Next?

8 Making the “Kitchen Table Pitch”

• Planning How You’ll Approach Your Prospective Lender
• Making a Compelling Pitch
• Handling Hesitancy and Concerns
• After Your Prospect Says “Yes” (or “Maybe”)
• Dealing With Your Prospects Who Say “No”
• Negotiating Final Terms

9 Preparing a Promissory Note, Security Agreement, and Other Loan Documents

• Why Documentation Is Important
• Formalizing a Loan With a Promissory Note
• Signing the Promissory Note: Individual and Sole Proprietor Borrowers
• Signing the Promissory Note: Business Borrower
• Notarization of Promissory Note
• How to Close the Deal for a Private Loan
• Creating Your Repayment Schedule
• How to Change a Promissory Note

10 How to Be Your Own Investor Relations Department

• Communicating Your Progress to Lenders
• Repaying Responsibly
• Keeping a Loan Log
• Acting Responsibly When You Can’t Make a Payment
• Changing Your Repayment Schedule and Preparing a New Promissory Note
• If You Have No Choice but to Default

11 Handling Gifts From Family and Friends

• Dealing With IRS Limits on Gift Amounts
• Why You Need—and How to Get—a Gift Letter
• When a Loan Turns Into a Gift: Creating a Loan Repayment Forgiveness Letter

Appendixes

A. How to Use the CD-ROM:

• Installing the Files Onto Your Computer
• Using the Word Processing Files to Create Documents
• Using the Print-Only File
• Files on the CD-ROM

B. Small Business Loans Forms and Worksheets:

• Best Bets List
• Start-Up Costs Worksheet
• Recurring Costs Worksheet
• Collateral List
• Loan Request Letter
• Promissory Note (for an amortized loan)
• Promissory Note (for a graduated loan)
• Promissory Note (for a seasonal loan)
• Promissory Note (for an interest-only loan)
• Promissory Note Modifications for a Loan to a Business
• Promissory Note Modifications for Signature by Notary Public
• Security Agreement
• UCC Financing Statement
• UCC Financing Statement Instructions
• Loan Log
• Gift Letter: Basic
• Gift Letter: Loan Repayment Forgiveness

Index

Here are summaries of important legal or procedural changes that affect the latest edition of this product.