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Family and Friends Business Loans:

Since ancient times, the wise who became and remained wealthy knew to invest with or lend money only to those who had already proven their expertise at the business needing the money.

Has a relative or friend wanting to start a business ever asked you for money or to guarantee a loan? Here's invaluable free advice: DO NOT GURANTEE OTHER'S BANK LOANS - EVEN YOUR OWN CHILD'S! There are other ways to help, such as loaning collateral if you can stand to lose it. Perhaps the best way to help a relative or friend to start a business is to become a wise private lender or investor, like the ancients did in "The Richest Man In Babylon". If you're no expert on the proposed business or on being a lender, then seek up-do-date advice from cautious, arms-length professionals with knowledge and experience about making this important decision. It may seem you should just call an attorney or a CPA, but they are not lenders with economic, forecasting and business management experience. Definitely use them for their professional purposes, but add the talent that the Dager, Spira and Miron team offers to truly serve your needs as a lender.

There are many modern complexities to investing and lending money privately to family or friends. The basics of what makes a good risk however, remains exactly the same as it always has been. You do not want to lose your money lending to family, or to experience the conflict and anger that can sever a relationship. A relative or friend who comes to you with a business idea and a request for money will be quite enthusiastic, and maybe over-confident (especially if sold on a franchise). You may be sympathetic to their dream but should be concerned about their ability to attain success and return your money.

CONSULTANTS ON FAMILY BUSINESS LENDING TO ACHIEVE PROPER
EXECUTION, FINANCIAL OBJECTIVES, AND ACCEPTABLE CREDIT RISK.

A wealthy man in ancient Babylon was approached by a friend for a loan. The friend wanted to invest in a herd of camels but lacked the money needed. The wealthy man gladly loaned his friend the money because he was a successful camel trader, and has borrowed and repaid on a smaller scale many times before. The wealthy man was confident his money would be handled wisely and returned as promised with a nice profit. Hearing of this, the wealthy man's brick layer and chariot maker came calling with a business scheme and promises of "easy money" if he would just lend them some gold coins to fund a quick camel trade. The wise man with the gold said "No Thanks". That illustrates how he became and remained the "Richest Man In Babylon".

From the book "The Richest Man In Babylon" by George S. Clason

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