Making the Pitch

After some small talk, describe the product or service and why you think it will sell, using any materials you've brought along. List several specific business goals you have for the upcoming months, such as trade shows you'll attend, sales goals you plan to achieve and new product versions you'll design. Explain why you think it's the right place and the right time to launch your business - and why you're the right person to do it with.

Ask your prospective lender some genuine questions for ideas on making your plan work. The more you leave room for give-and-take, the greater the chances your prospect will be willing to participate.

2. Ease into the loan request.

Many fundraisining advisors suggest you be direct in making your request for a loan. With family and friends, it's actually more effective to be comparatively indirect. You may be eager to just blurt out your question, but hold off until the question seems to arise naturally. In some cases, you may need only to start talking about what you want to do before your prospect volunteers to make it happen.

If you need to make your request more explicitly, do so with a "soft ask." After talking about your business, you might say. "I need to raise about X amount of money to get started, and I thought you might be interested in participating."

If the person looks at all uncertain, acknowledge any tensions with a comment like "No pressure, of course." Next, explain: "I thought it might appeal to you, since I know you started your own web design business years ago," or "I thought of you because I know you have a background in business." Don't be apologetic - your manner should continue to show your confidence that you've offered your prospect a reasonable investment opportunity.

3. Keep any agreement verbal.

Think of your kitchen table pitch as merely the opening to a longer conversation. Your goal for the moment is for your prospective lender to say yes to the idea of a loan - not to sign on the dotted line. It's best to leave this initial conversation open-ended.

If you get a yes, explain that you'll send a letter detailing the loan terms and next steps. If your lender is so gung-ho that he or she can't resist asking a few more questions, reply in gerneral terms. If, for example, your prospect wants to talk about exactly how much you need to borrow, offer a range, such as "between £5,000 and £15,000." If he or she asks about repayment, simply describe how and when you'll pay the money back.

Once your prospect has heard enough to agree to the idea of an investment, wrap up your pitch conversation. Explain the next steps - you'll send your business plans and loan request letter, and then you two can hammer out the details.

I specifically advise against giving the lender a copy of your loan request letter or business plan during this initial conversation. Preserve the informality of the meeting by sticking with purely verbal discussions and agreements.

Suppose the conversation hasn't gone well, and your prospect is uncomfortable or unwilling to agree to a loan. If possible, don't let him or her actually say the word no. Say something like: "I can tell you're not comfortable with this yet - can I contact you again in six months to show you mu progress?" Very few people make their financial decisions quickly, and entrepreneurs often recieve a lukewarm reception long berfore they get an eventual "yes."