You’re strapped for cash, so you’re thinking about asking a friend or family member for a loan. Whether you need a small amount to get by until payday or a larger sum for a major life event — i.e., seed money to start a business — you’re not sure how to structure the ask.
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There’s a common school of thought that mixing loved ones and money just doesn’t work. Of course, everyone doesn’t share this mindset, so tread lightly to ensure 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’re asking friends or family for the loan. “This is not a topic easily approached or discussed,” she said. “When you find yourself in need, take a bit of time to strategize before officially asking.”
She said it’s important to begin with a self-assessment, so you can go in with a plan. For example, think about why you need the money, whether you’ll disclose the reason for the loan, how much you need and your repayment strategy.
When you have your plan together, Smith said your ask should be as professional as possible.
“Let the person know you have something serious to discuss and schedule a specific time to speak,” she said. “Surprising the person in the middle of a party or family gathering does not bode well for any future trust.”
Don’t expect an immediate response, as Smith said most people will need time to consider your request. Instead, she said to just ask when they expect to make a decision, thank them for listening and allow them time to think.
“If this conversation is confidential, remind them, and take your leave,” she said.
It’s very possible your request will be declined, as Smith said not everyone is comfortable lending money. She also noted that the person’s financial situation might not truly reflect what you see on the surface.
“There are some people who present as having plenty, but are actually in debt themselves,” she said. “And others who live simply with large bank accounts.”
If the person decides not to lend you the money, Smith said they do not owe you an explanation. However, it’s also possible your request for a loan will be granted.
Lisa Grotts, an etiquette expert known as the ‘Golden Rules Gal,’ said a payment plan should always be put in place in this situation.
“Put it in writing with a deadline,” she said. “It would happen at a bank, so a loan from a friend or family member is no different.”
She said it’s also important to establish ground rules, so things won’t turn awkward.
“Many people need loans in the age of Covid, when so many businesses have been closed,” Grotts said. “The asks can range from keeping their business afloat to help 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 set repayment plan and ignore their requests to hold up your end of the bargain.
“The longer it goes 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. Make every effort to be on time with your payments, but be honest if you know you’re going to miss a deadline.
It’s much better to let the person know in advance that a financial setback will cause your payment to be late than to let them think you’re trying to get out of returning their money.
Ultimately, borrowing money from loved ones can be a touchy subject, so do everything you can to decrease the awkwardness. If they decline your request, politely thank them for their time, and if they grant you the loan, don’t make them regret doing so.
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