Personal Investment & Financial Planning Q`s/Loan


Mr. Kerr

I am starting a small company , we are 4 partners.
I am looking for a personal loan to invest in the company(my share), i have a cousin who could lend me the money $15000.
I am not able to put him in the company because the other partners do not want new members.

I would like to make an offer to my cousin for the loan .
what kind of offer i can make him for that kind of loan? Even if it is love money i would like to do it businesswise with him .
Can you put me on a direction so i can build up something reasonable for me and him?

Thank you

Your decision to document a loan from a family member with a formal written agreement is wise.  Even though your cousin may be making the loan out of affection for you, unexpected circumstances can change the relationship down the road.  Mixing family / friends with personal finance always come with risks for the personal relationship.  

That being said, a simple one page “Note” that you both sign, your cousin as the Lender, you as the Borrower, is the best way to proceed.  You do not need a lawyer to draft it.   The note, in addition to specifying the parties, should include:

1.   The date of the note

2.   The amount of the loan.

3.   The state law under which the loan is made (just in case there is ever a dispute).

4.   The purpose of the loan, (e.g. “to assist in business start-up”).

5.   The interest rate. (Currently the “Prime Rate” for unsecured commercial loans is 3.5%.  Your interest rate should be something higher than this, say 5% per year.  But that is up to you and your cousin.

6.   When the interest is payable.  I suggest quarterly but not less often than semi-annually.  At 5% on $15,000 a semi-annual interest payment would be $375 every six months.

7.   The terms for repaying the principal of the loan.  This is usually tied to the expectation of the business venture’s future ability to generate the cash necessary to repay the loan.  For example, the loan may be for five years, with interest only for two years while the business gets started, followed by $5,000 per year at the end of years three, four and five.

8.   The final maturity should also be stated.

These are just the basics, and it can get much more complicated, but it is enough for both you and your cousin to feel that there is a clear understanding on the part of both parties as to the expectations for repayment with interest.

Hope this is helpful.  Good luck!

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John Guilford Kerr, CFP, CFA


I can answer questions related to personal financial planning, asset allocation, private equity investment analysis, fixed income, mutual fund, ETF, and stock questions, estate planning (basic), education planning, insurance planning, and business financial planning.


I have thirty-eight years of experience in finance, in the U.S. and internationally, for both public and private corporations. I have specialized in personal and small business financial planning and investment advisory services since 2005.------ - ten years commercial banking, New York, Paris, Houston, Charlotte, Atlanta---- - six years treasurer of a publicly traded health care company, Philadelphia----- - six years international project finance (Bechtel), San Francisco, Manila, London----- - five years head of international hotel development (Hyatt), Chicago---- - eleven years personal financial planning.----- Registered Investment Adviser, Hawaii---- FINRA General Securities Representative - Series 7---- FINRA Uniform Combined State Law - Series 66---- Resident Producer Insurance License, Hawaii-, Accident and Health or Sickness, Life, Variable Life and Variable Annuities

CFA Institute of Hawaii---- Certified Fiancial Planner Board of Standards, Inc-----. National Association of Personal Financial Advisers----- Financial Planning Association----- National Association of Tax Professionals

Project Finance Yearbook - 1997 / 1998 "Manila Water & Sewerage System Concession"----- "The Road To Helsinki, An Analysis of European International Relations Leading to the Conference On Security and Cooperation in Europe"' published 2015.

Certified Financial Planner, Certified Financial Planner Board of Standards, Inc.---- Chartered Financial Analyst, CFA Institute----- Certificate in Financial Planning, Boston University---- Masters in Foreign Affairs - University of Virginia---- Bachelors of Arts, Government - Ohio University

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