The most important sentence in family startup money is this one: a loan gets repaid whether or not the business works. If that’s the deal, a personal loan agreement papers it. If it isn’t — if repayment depends on success — you’re an investor, and you need different paper and a lawyer.
Startup lawyers bill by the hour for good reasons — but a person-to-person startup loan needs one page, not a retainer. Free to draft, $29 to sign.
Ask yourself: if the business folds in eighteen months, does the money still come back? If yes, you’re a lender — keep reading. If no, you’re an investor, and a loan agreement is the wrong instrument: you need equity or profit-share paperwork drafted with advice, because investor money that’s papered as a loan (or not papered at all) is where family startup stories turn into estrangements.
The clean structure for family startup money is a personal loan to your relative, who then puts it into their venture however they choose. They owe you personally, on a fixed schedule, regardless of the company’s fate. The alternative — lending to the corporation, taking guarantees or security over business assets — is legitimate but genuinely commercial: shareholder loan accounting, priority questions, security registration. That layer needs a lawyer, and pretending otherwise is false economy.
Drafting is free; the single $29 signing fee (borrower’s by default) produces a sealed, certificate-backed PDF both of you keep.
Person to person, repayment independent of the business, both signed.
Create my loan agreement →Lend Right documents loans between individuals — you to your relative, personally. Lending to a corporation, taking a personal guarantee, or securing against business assets are corporate/commercial arrangements that genuinely need a lawyer. Lending to the person keeps it simple: they owe you regardless of what the company does.
Fixed repayment that doesn't depend on the business succeeding. If you'd only be repaid 'once things take off,' or you expect a share of profits, that's equity or profit-sharing — different documents, different risks, different tax. The agreement's fixed schedule is what draws the line.
Yes — a business-purpose loan is exactly where a real rate makes sense, from the 3% prescribed rate up to anything under the federal 35% APR cap. Interest you receive is taxable income to you; keep the payment trail clean.
The loan survives — that's the point of making it a personal loan. Your relative still owes the balance on the agreed schedule, though you can always renegotiate in writing. If you couldn't stomach collecting from a relative whose business just failed, consider whether this should be a smaller loan, a gift, or a lawyer-drafted investment instead.
Operated by RULE8 Inc., of which Lend Right is a product · reviewed July 3, 2026, Lend Right Editorial Team.
Framework: Criminal Code s. 347 (35% APR ceiling); provincial limitation and e-commerce statutes; CRA treatment of interest as taxable income; the 2026 prescribed rate (3%). Corporate lending, guarantees, and security registration are commercial-law territory outside this tool.
Important scope note: this page covers unsecured personal loans between individuals only. Loans to corporations, equity or profit-sharing arrangements, and secured business lending need a lawyer — that is a feature of this page's advice, not a disclaimer on it. Not legal or tax advice; Quebec not yet supported.
Signing validity: e-signatures bind ordinary contracts in supported provinces; the certified PDF records both signatures and timestamps. The document is evidence — facts decide outcomes.
Lend Right provides self-help document automation, not legal advice, and no lawyer-client relationship is created. For complex situations, consult a licensed lawyer in your province.