10 Pitfalls of Starting a Family Business

Lending Money in the Family
Know why you're lending money before you offer that loan.
Know why you're lending money before you offer that loan.
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We're not saying that you should never lend money to family members. It's an unavoidable opportunity to help people, especially in business situations where practicality and blood ties can make it necessary. At the same time, we would also like to say that no one should ever lend money to family members.

If practicality demands that money be loaned within the family, both the borrower and the lender need to examine the emotional complications that come with the loan. Is it motivated by a sense of guilt? Is it a test of the borrower's reliability? Is it going to change the way the two parties treat each other on a day-to-day basis? Enormous red warning lights and sirens should be going off in everyone's brains if the transaction is anything other than purely financial.

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