Here is why it is a bad idea to lend to or employ family and friends in your business.

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Lending to family and friends means you lose both.

Today’s subject is on loans, especially when we borrow money from and lend to relatives, family members and friends. This is usually a very tricky situation. It can be very dangerous and put you in a very difficult spot. Why? Because if you default these people find it difficult to take you to court. But it doesn’t mean they will not have other ways of punishing you that are sometimes worse.

When you lend money to friends, relatives or when you employ them in your business, the biggest challenge there is if they misbehave, there’s a limit to how much discipline you can put in place. So this makes it very tricky. As a general rule trying not to lend money to friends and relatives why? Because you will probably lose both, you will lose your money and you lose your friends.

When a relative or friend borrows money and they can’t pay back. The big problem is they feel embarrassed, they start to avoid you, you have lost a friend and when they can’t pay back you can’t really do anything about it. You’ve lost your money, too.

If you find yourself in a situation where you have to lend to friends, family, or nearly anybody else, again, as a lending rule, don’t lend an amount that you cannot afford to give.

Keep this in mind before you lend to family or employ them in your business.

  1. Don’t lend what you cannot afford to give,
  2. Don’t lend some amount of money that is so big that when the person can’t give it back to you, your family ends up in difficulties.

Be very careful how much you lend out because giving too much will lead you into self-destruction despite your good will and intention.

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