The major advantage of borrowing money from friends or family to start a business is ________

A) they will be aware of all credit problems that might affect financing
B) they will not expect to be repaid
C) they will not usually expect a high rate of return on their investment
D) they will ensure that you do not overestimate your initial funding needs
E) they do not need to be kept informed of any risks of the venture

C
Explanation: C) Family and friends are often good sources of financing a small business, because unlike banks or other lending institutions, they often do not require a high rate of return or demand to see the business turn a quick profit. Yet family members do expect to be repaid. Since family and friends do not use the same process as a bank would for deciding whether or not to approve a loan, it is less likely that family or friends would be aware of all credit problems affecting business funding or that they would be able to help you accurately estimate your funding needs. However, they should be kept informed of any risks of the venture.