Need to borrow money from a friend or family member? How to broach the subject

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You are short of money, so you’re thinking of asking a friend or family member for a loan. Whether you need a small amount to get you through until payday or a larger sum for a major life event – i.e. seed capital to start a business – you don’t know how to structure the request.

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There is a common school of thought that mixing loved ones and money just doesn’t work. Of course, not everyone shares this mindset, so be careful to make sure you don’t inadvertently tarnish your relationship with the other person.

Jodi RR Smith, president of Mannersmith Etiquette Consulting, said borrowing money is rarely easy, especially when you ask friends or family for the loan.

“It’s not an easy topic to talk about or discuss,” she said. “When you find yourself in need, take some time to strategize before formally asking.”

Here are some tips on how to apply to borrow money.

She said it’s important to start with a self-assessment, so you can start with a plan. For example, think about why you need the money, if you disclose the reason for the loan, the amount you need, and your repayment strategy.

When you have your plan together, Smith said your application should be as professional as possible.

“Let the person know you have something serious to discuss and schedule a specific time to talk,” she said. “Surprising the person in the middle of a party or family reunion doesn’t bode well for any future confidence.”

Don’t expect an immediate response, as Smith said most people will need time to review your request. Instead, she said to just ask when they expect to make a decision, thank them for listening, and give them time to think.

“If this conversation is confidential, call them back and take your leave,” she said.

It’s very possible that your request will be denied, as Smith said not everyone is comfortable lending money. She also noted that the person’s financial situation might not really reflect what you see on the surface.

“Some people present themselves as having a lot, but are actually in debt themselves,” she said. “And others who simply live with big bank accounts.”

If the person decides not to lend you the money, Smith says they don’t owe you an explanation. However, it is also possible that your loan application will be accepted.

Lisa Grotts, an etiquette expert known as the “Golden Rules Gal,” said a payment plan should always be in place in this situation.

“Put it in writing with a deadline,” she said. “That would happen at a bank, so a loan from a friend or family member is no different.”

She said it’s also important to set some ground rules, so things don’t get awkward.

“A lot of people need loans in the age of Covid, when so many businesses have been shut down,” Grotts said. “Requests can range from keeping their business afloat to helping with a mortgage payment.”

No matter why you need the loan, she noted that time will be your enemy if you don’t follow the established repayment plan and ignore their demands to meet your end of the bargain.

“The longer it remains unpaid, the less positive the turnout will be,” she said.

Therefore, it’s important to create a repayment plan together that you can realistically adhere to. Strive to be on time with your payments, but be honest if you know you’re going to miss a deadline.

It’s better to let the person know ahead of time that a financial setback will result in a late payment than to have them believe you’re trying to avoid returning their money.

Ultimately, borrowing money from loved ones can be a tricky subject, so do whatever you can to lessen the embarrassment. If they refuse your request, politely thank them for their time, and if they grant you the loan, don’t make them regret doing it.

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