Borrow money for your start up from friends, relatives, or life long associates. Don't be shy to borrow money from family and friends. Did you know that the founder of Wal-Mart, Sam Walton borrowed $20,000 from his father-in-law?

How about Fred Deluca? A friend of the family loaned Fred $1,000. He started Subway with the money. Today there are almost 22,000 Subway Restaurants Worldwide. Mega corporations and small mom and pop stores have used this method. Don't be shy, you'll lose out.

First impressions are key to being successful in borrowing money from those you know. Make your initial approach a pleasantly surprising experience for the intended lender. Be business-like but warm in your dealings. Above all, be yourself, the person they know.

Your Initial Approach

Write down a list of people you think are potential lenders. Go through all of your various address lists. Think of very close relatives. Then list your distant relatives. You know, the ones you call twice a year, but hardly see. Yeah, Cousin Ethel.

You'll have better success with the following types:

1. Those that have money. The more, the better.

2. Do you have past issues with rich Uncle Harold? Don't go there! Go where warmth and mutual respect for each other reigns supreme. Uncle Harold may treat your approach with disdain. Then he'll talk about you to other relatives.

3. Business experience? Does your intended lender have any? This is not a requirement, but it would be good if they did. People who have been there understand what you're going through when the pickings are lean.

4. There has to be some degree of trust between you and your intended lender. This may be last on the list but it certainly isn't least. In order of importance, it should be at the top.

When your prospects have been whittled down to the top two or three, make the approach. Chose a mutually comfortable place. Have your plans written down. The business-minded lender will ask for that. Clearly record the amount you wish to borrow.

The closer your relationship, the more tentative your potential lender may be. Their primary concern is that the loan would hurt your relationship. Sure loosing the money is always in their thoughts. But I believe a money-damaged relationship is tops.

When you borrow money from friends you must consider a future money-damaged relationship. Take positive steps to allay their fears. Show them a solid all round business plan. Convince them that you have considerably lowered the risk of failure because your relationship with them is important to you also.