Debt/Money from Personal Resources – Part 1 of 2

The fact remains that the most common sources of Trading Master Plan funding for start up, small businesses and entrepreneurs are from personal investment and funds generated through family and friends.

Entrepreneurs are reminded to look first at their own personal savings and the leverage of personal assets, such as home equity or investments. Many small business owners get access to additional capital by borrowing from or pledging assets owned by family and friends.

Most professional capital providers first look to see that the entrepreneur is “all in” and that those closest to the entrepreneur are backing the venture before he will consider an investment or loan.

Document the transaction:
Although the initial funds may be generated from those closest to you, it is recommended that you treat the transaction professionally.

For example, to avoid family strife and miscommunication, any capital infusion should be identified as to whether it is debt or equity, when and how it will be repaid and what the interest rate or return is. Simple loan agreements can be purchased at a local office supply store in the “Forms” section.

A return on the investment is required:
Even transactions between family and friends require a minimum interest rate, which is determined Fast Forex Profits and published monthly by the IRS. When less than the minimum rate is charged, the difference may be imputed as additional income to the lender, which may be taxable.

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