Benefits

• An advantage of borrowing money from family is that they may offer lenient repayment terms or may even give you the money as a gift. It may also be easier to get the money you need from family than from other sources, like a bank.
  
  

Drawbacks

• On the downside, if you are expected to pay the money back but cannot because your business fails, it can create a permanent strain in your family relationship. Another family member may also resent the fact that you were given the money.
  
  

Considerations

• According to SCORE.com, one option to consider in a loan agreement between family members is to put all terms in writing and have it administered by a neutral third party. This can help mitigate or even eliminate misunderstandings that can occur along the way.