Family Bank

A family bank is an internal facility that lends money to next-generation family members for ventures, education, or first-home purchases under documented terms. Done well, it accelerates entrepreneurship and teaches stewardship by treating loans as real obligations. Done badly, it becomes an opaque grant programme that cements entitlement.

The single most important design choice is to document the loan as if the borrower were external: written agreement, market or near-market interest rate, defined repayment schedule, collateral or covenants where appropriate, and explicit consequences for default. Loans without those terms are gifts with extra steps.

The application and review process should sit with a committee of senior family members and trusted external advisors — never with the parents alone. Loans funding ventures and education tend to produce better outcomes than loans funding lifestyle or asset purchases. Defaults, when they occur, should be reviewed openly across the family, not treated as private embarrassments.