SOURCES OF EXTERNAL FINANCE - Family and Friends

Family and friends - Investment from people known to the entrepreneur. May want to help support a business if they have some money.

ADVANTAGES

• May be flexible repayment terms and conditions.
• May offer loans without collateral
• May provide interest free or low rate finance

DISADVANTAGES

• Amount may be limited
• May place pressure on relationships
• Lenders may lose their money
• They may also want to be more involved in the business

BEST FOR ... Small businesses running as sole traders or possibly a partner.