Such loans must be dealt with cautiously. Simple contracts should be drawn out for such transactions. The terms and conditions of the loan should be spelled out. If friends and family wish to relinquish their rights to interest payments, the funds should then be considered equity funds which makes them part owners of the business. If this is the case, the limits of their involvement, and the risks involved in the venture should be spelled out in writing.
Personal loans are easier to find and manage than bank loans.
The terms are not as stringent as those of the banks. The down side is that it could destroy good relationships if not handled very well. These are individuals or groups with money to invest. They want to see a well-written business plan presented in a professional manner. The plan must be good enough for them to give it a second look.