CircleLending satisfies the entrepreneurial dilemma about borrowing money by assuming, at the outset, that you’re going to have to get some funding from friends and family.

Which, I have to admit, is a pretty good assumption when it comes to small business finance.

[Incidentally, recently CircleLending became Virgin Money USA. Unfortunately, I feel dirty just writing Virgin Money, for obvious reasons. So let me clarify at the outset that the previously-perfectly-nicely-named Circlelending.com got purchased by Sir Richard Branson’s Virgin Group. I’m sorry that their naming consultants could not think of a better name. I’m going to refer to it through the rest of this article as CircleLending.]

For a starting price of $195, CircleLending provides independent third-party documentation of your loan from a friend. For a few hundred more dollars, they will also provide third-party tracking of loan payments for the life of the loan.

They serve as payment intermediary between you and your friend, keeping official track of what has been paid and what is still owed.

I whole heartedly endorse the practice of documenting friends-and-family loans, or any similar transaction you might be tempted to complete with just a handshake. You just never know when a printed, signed document spelling out all the relevant terms of the transaction can save you time, money, and relationship stress.

For that reason alone CircleLending provides a valuable service.

BUT, here’s the problem. CircleLending is charging relatively high rates for something that can be done much more cheaply. If all you need is a good document template for your loan, do yourself a favor and keep shopping online.

$195 for the price of providing official documents seems kind of steep, given that a cheaper solution to the main service of CircleLending can be found online at USLegalForms.com, by clicking on your state, and “Promissory Note.” A good, state-specific document will set you back $12 to $15.

In sum, document your friends and family loans, but don’t overpay.

NEXT: Part III – A review of Prosper.com as a small-business financing tool