Page 54 - 597 Business Ideas You can Start from Home - doing what you LOVE! (Beginner Internet Marketing Series)

Step 3. Bootstrapping: M ake the Most of Your Own Resources 43

be fairly valued at this point so you would blindly be giving
up a percentage of your profits.)
3. Penalties ifyou miss the due date. Could the person extend
the loan if you notify them at the nine- or ten-month mark?
Even if you plan to pay on time, have a discussion about
their expectations. If they can't afford to extend the loan or
if you are not completely comfortable that you will be in a
position to pay it back, think twice about accepting. (Check
with a more distant relative with whom you wouldn't mind
losing your relationship. Just kidding!) Though you obvi­
ously don't want to default on this loan, try to find someone
who would not be adversely affected if you never paid them
back. The lender should be comfortable going into the loan
process knowing that you offer no guarantees.
4. The form of written agreement that needs to be com­
pleted for everyone to be comfortable. An 1. 0.U. is an
informal agreement and acknowledgment for a small loan.
It can be either verbal or written and is used when a formal
contract may feel too "official" for family or close friends. A
legal I .0.u. is called a promissory note . It is legally binding
and can be used in court. You can find a sample Unsecured
Promissory Note on the U. S. Chamber of Commerce's web­

site: www.uschamber.com.

Remember, you don't need to offer your lender a piece of the
business. You simply need to borrow some money. It's also useful if
the person has no stipulations on what the money be spent on, so
long as it's related to your idea. (You may want to pay off some credit
card debt with the loan, for example .)

The Emotional Side

David Deeds, an assistant professor of entrepreneurship at Case
Western Reserve University in Cleveland says borrowing money
from family members is, "The highest risk money you'll ever get.