The three-door rule
Every legitimate private funding of a business fits into three structures. The choice comes down to one question: does this person want to share the risk or do they want their money back?
Door 1: equity — real partners
A capital increase turns the money into shares: your aunt did not “lend” to you, she bought a part of the business. There is no obligation to repay (which is why it is not deposit-taking), she shares in profits and losses, and her exit is to sell her stake. The rules of the game are written into the bylaws and the shareholders' agreement — in a SAPI, with tailored share series and agreements. Minimum discipline: a notarized shareholders' meeting, shares issued, share ledger kept up to date. The “I'll get you the paperwork later” is the breeding ground for the worst family fights.
Door 2: the loan agreement — well-documented creditors
If the person expects their money back, it is a loan and it is treated as such, even if it is your father-in-law:
- An interest-bearing loan agreement (mutuo) with a certain date (notarial ratification) — it protects both parties and the business before the SAT (2a./J. 161/2019);
- A market rate: between related parties, gift-level or stratospheric rates invite tax recharacterizations;
- Transfer and a payment schedule — an individual borrower should also keep in mind the $600,000 reporting requirement;
- If an individual lends to your company: the company withholds 20% of the nominal interest (LISR 135) and the interest it pays is deductible if requirements are met.
Door 3: convertible debt — the honest hybrid
When the parties cannot agree on what the business is worth today, the money comes in as a loan with the right to convert into shares (in the next round, at a set term, with an agreed discount). The investor keeps a creditor's protection while the business matures; the founder defers dilution to a fair valuation. It demands careful drafting —conversion events, valuation cap, what happens if there is no round— but it is the standard bridge between doors 1 and 2.
The fourth door (which is a cliff)
“I pooled money from 40 acquaintances, promised them 2% monthly and I sign receipts for them.” That is not a round with family: it is deposit-taking from the public — an offer to indeterminate persons + an obligation to repay + a return — prohibited by art. 103 of the LIC and punishable by 7 to 15 years in prison (art. 111). Distant kinship determines nothing; the structure does: a few contracts negotiated one on one and documented individually live behind door 2; an open window with a promise of a return for whoever shows up lives at the cliff.
A protocol to avoid breaking the family (or the law)
- Define the door before you receive a single peso: partner, creditor or convertible?
- Grown-up paperwork: a shareholders' meeting and shares, or a ratified loan agreement — no napkins.
- The worst case, in writing: what happens if the business goes under? The partner loses, the creditor collects what there is, and everyone knew it from day one.
- Regular communication: family capital forgives bad results; it does not forgive silence.
- Never promise a “guaranteed” return — not even to your mother: besides being illegal at scale, it is the seed of an impossible expectation.