Should I borrow from my family?

Dear Aunty B,

I am having trouble getting my bank to provide more funding to tide us over for a difficult quarter before I expect things to pick up. I am thinking about approaching my brother-in-law for the funds as he offered to put some money into the business when I first started five years ago.

But at the time I told him I would never take family money. Now I am desperate and need about $150,000. What do you think? He is an experienced businessman, or I wouldn’t ask him.

Yours,

Desperate.

Dear Desperate,

You poor thing. It’s tough. But you seem to be very clear about the downside of getting family involved as you have already refused family funding. You do point out that he is an experienced businessman. So I assume he is financially successful and if he loses $150,000 he won’t be on the street.

In that case, go to him with a proposal. Make sure you spell out that if he refuses, your relationship will remain the same. And present him with a clear plan to pay him back as soon as you can. Otherwise you might want to offer him equity.

One last thing: you say it is your brother in law. I would involve your sister too. The last thing you want is your brother-in-law agreeing against your sister’s wishes.

Good luck!
Your Aunty B