Short answer
Track a friend loan with a signed note, a recorded disbursement, a payment schedule, and a live balance ledger. Keep the transaction in the business books and send the lender periodic statements so both sides see the same facts.
How to handle it
- Create one agreement that names the borrower and lender and states the full amount owed.
- Record the bank transfer and attach it to the note.
- Use a ledger for principal, interest, payment date, method, and remaining balance.
- Send the lender a statement after each payment and retain signed amendments.
Why this form of funding can work
A transparent ledger makes small private borrowing manageable: founders can see debt service alongside payroll, supplier bills, and receivables, while the lender can follow a consistent record rather than ask for updates informally.
Credit and management focus
Use the ledger to separate outstanding principal from accrued and paid interest. Reconcile every payment to a bank record and flag a missed cycle early, before the balance, expectations, and business records diverge.
Common mistakes to avoid
- Mixing personal and business payments without a record.
- Tracking only through chat messages.
- Assuming a missed payment is understood instead of documenting a revised plan.
What to track after funding
Use one current ledger for the agreement and update it whenever money moves. The record should make it clear which payment cycle is due, what interest has accrued, and how much of each payment reduces principal.
- Payment cycle: next due date, payment frequency, grace or cure period, and whether the cycle is interest-only, amortizing, or tied to a specific collection or milestone.
- Principal: original amount advanced, principal repaid in each payment, remaining principal, and any approved additional draw, prepayment, or write-off.
- Interest: rate, calculation method, accrual period, interest due, interest paid, and any unpaid interest carried forward under the agreement.
- Payment allocation: show separately how each payment was applied to fees if lawful, accrued interest, and principal. Do not present a payment as principal reduction when it only covered interest.
- Performance and exceptions: repayment-source progress, covenant or milestone status, missed or late payments, notices issued, waivers, and signed amendments.
Documentation to supply
Keep an organized document pack that a lender, accountant, lawyer, auditor, or future funder can review without reconstructing the transaction from messages.
- Executed promissory note and any guarantee, security, subordination, or collateral documents.
- Borrower authorization, such as board, manager, shareholder, or partner approval where required.
- Evidence of the original disbursement, including payment confirmation and the receiving account.
- Repayment schedule and a current ledger showing the opening balance, interest, principal allocation, and closing balance for every cycle.
- Evidence supporting the repayment source, such as contracts, invoices, purchase orders, collection reports, operating cash forecasts, or asset information.
- Bank or payment-processor records that reconcile to the ledger, plus receipts or acknowledgements for each payment.
- Signed amendments, consent records, default or cure notices, and material communications when the original terms change.
Questions people ask
Practical FAQs
Can I borrow from a friend for my business?
A private loan may be possible, but the business should borrow in its own name where appropriate and the parties should use written terms and professional advice.
What should a friend-loan ledger include?
At minimum: original principal, interest method, each payment, payment allocation, running balance, and references to any amendments.
Turn the plan into a managed record
Set up the agreement with Realfund
Realfund helps parties organize a private funding agreement, its payment cycle, and the evidence behind it. It gives the borrower a clearer debt-management workflow and gives the lender a current, shared record of the obligation.