Banks and Personal Loans
There are many people that use banks and personal loans to start their new businesses. They do not want to borrow the full amount from friends and relatives and prefer to stand on their own financial resources to get their new business up and running and operating financially on an even keel.
The level of monetary contributions that can be expected from banks and personal loans obtained through family contributions are rated on a highly different rate from one to another. The banks will charge a rate just above the prime lending rate if the credit rating indicates such a discount is merited. Personal loans that are given by family members are generally provided with no interest rate charged at all.
The preferential treatment differs between banks and personal loans obtained by family too. Banks might seem overjoyed by the large loan you are requesting but might very well disapprove it if all of the paperwork is not in order. Personal loans obtained from family members will generally be accomplished without any type of paperwork being necessary.
The time limit of receiving cash from banks and personal loans obtained from family members will be drastically different. The bank has a set process of lending money, and all paperwork must be complete before a check is issued. When personal loans are obtained from family members, there may be a one day wait required. The family member only needs enough time to go to their bank and withdraw the funds. The time may be quicker if the family member carries a significant amount of cash around with them on a day-to-day basis.
It fairly evident that any savvy business person would prefer family banks and personal loans that are quick and easy rather than go through the banks and personal loans process that might take weeks to obtain money. These business people might ask for small amounts of money from banks and personal loans with family member might change to large amounts that they know they can get rather easily.
So for the many people that choose to use banks and personal loans to start their businesses, make sure they are getting their money from the family end of the financial curve and leaving the banks and personal loans at their financial institution alone and open for further discussion. Otherwise, they will use up all of their financial options with one financial negotiation.
by Melissa.Brown 19 years ago