What forms do I need for my brother to legally invest in my new company?

Full question:

I am going to start a small business and my brother wants to invest in it. Which forms do I need to complete to make our relationship legal?

• Category: Debts and Credit
• Date: 04/07/2025
• State: Georgia

Answer:

I'm assuming that this is a loan and that you don't intend to make him a shareholder or give him an ownership interest or involvement in the business operations of the company. USLegaforms offers a wide variety of forms to suit your preferences for the terms of the loan. A promissory note may be secured or unsecured. When it is secured, it means that property, called collateral, may be taken by the lender if the borrower fails to pay the loan payment. If the debtor files bankruptcy, the lender may be able to recover the value of the loan by taking possession of the specified collateral instead of receiving only a portion of the borrowers property after it is divided among all creditors. Collateral may be many different types of property, such as shares of stock of a company, inventory, accounts receivable, etc.

A promissory note may provide for payments to be made in installments or in a lump sum. The terms may provide for a series of smaller payments at the beginning of the loan period and a larger balloon payment at the end of the loan period. The option for a confessed judgment agreement, also called a cognovit note, may also be included. A confessed judgment agreement requires the debtor not to claim defenses and agree to have a judgment entered against him if he fails to pay and the matter is taken to court. Please see the forms at the links below to determine which best suits your needs.