The risks of receiving loans and investment from family members and friends

Posted on Tuesday, May 4th, 2010 at 5:35 pm    

Many people who want to start their own businesses have trouble securing capital from investors and creditors. Without any other options, they turn to family members and friends.

One advantage of loans from family members and friends is that they may have very low to no interest payments, meaning that the business owner will only owe the principal amount. However, there are many legal risks of receiving loans and investments from family members.

In some cases, the arrangements could turn sour and require a legal resolution. To avoid such a disagreement, family members should draw out formal legal contracts with the assist of an attorney. Moreover, they should also consider the tax implications of such loans and investments.

If you or anyone you know has questions about loans or investments from family members, contact the Des Moines business attorneys of LaMarca Law Group, P.C., at (877) 327-2600.

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