Take James McAnerney who decided to open his own business, he needed €50,000 to buy into a franchise but without a track record approaching the bank would not be easy so he looked closer to home to raise the start up finance.

Mr MCAnerney said , “I reckoned franchising was the way to go rather than start a business from scratch, I found Cartridge World within four weeks.”

Mr MCAnerney had less than half the finance required himself so he decided to borrow the rest from his family.

Just more than 18 months ago he opened his first Cartridge World store in Dundalk about 18 months ago specialising in recycling printer cartridges at bargain prices.

“I had the option of going to the bank but I would have been able to give only projections,” he said. “It was easier to borrow from my family with the promise that, after one year’s trading, I would be able to get a bank loan to pay them back.”

Many successful small businesses look to family and friends for start up finance says Pat Delaney, the director of the Small Firms Association.

Delaney says it's a good idea, “It is probably the biggest source of start up capital available to very small companies.”

Delaney pointsout that there's plent ofthis type of funding available to finance start ups given that the first generation has inherited wealth.

Michael Dwyer is another small business entrepreneur who used a mix of family loan when setting up Pigsback.com, the online marketing portal says usingfamily finance can work well for those who follow a few rules.

Some of the rules include:

. If you are asking your family to invest, you must put in your own
capital too. This shows that you are committed.
. If funding is really an investment make it clear to your family
members that this is an investment that should be written off.
. Get family members to put in only as much as they are prepared to
risk.

If you are considering starting a small business and you're interested in raising finance from family members read Bank on family members for a helping hand

David
Small Business Resource