31/08/2016 7:19 AM AEST | Updated 31/08/2016 7:19 AM AEST

Parents Risk Nest Eggs To Finance Millennials' Business Dreams

If their kids can't get loans, they're willing to risk it all.

Cat Napping Suburban Retreat
Ebony Centazzo borrowed $20,000 from her parents to launch her cat daycare and boarding business.

Millennials who want to launch their own businesses but don't have the funding are increasingly turning to their parents for loans.

Business consultant Shannon Daniels said that despite the Federal Government pledging to support innovation, wannabe small business owners without cash reserves or credit ratings were struggling to raise startup capital.

He said that many millennials were choosing to start their own businesses simply because they couldn't find a suitable job.

"Millennials are chasing flexibility at work and would prefer to start a business if they can't find work to suit their lifestyle," Daniels, who runs Perth business consultancy Emanation, told The Huffington Post Australia.

"In some cases we're talking about loans of $100,000 which is eating into retirement nest eggs and putting parents at big financial risk."

Despite those risks, millennials are asking their parents for money -- and it's paying off.

Ebony Centazzo, who founded a luxury cat daycare and long-term boarding service, said she was 27 when her parents Jean and Eddie loaned her $20,000 to launch Melbourne-based business, Cat Napping Suburban Retreat.

Cat Napping Suburban Retreat
Centazzo with one of her happy clients.

Centazzo said she looked into getting a personal loan to finance the business but was ineligible because she didn't have any assets.

"I also looked at credit cards, but they wouldn't give me enough funds," she told HuffPost Australia.

"(My parents) had sold our family home a year prior, and had a bit of money in the bank from the sale.

"We were a typical western suburbs family; Dad was the main provider until he injured himself at work. So it was a big ask to ask them to lend me the $20,000."

She said her retired parents ran the business for the first 12 months while she worked three days a week as a travel agent.

"I was scared to give up that guaranteed pay in my bank account each month," she said.

"If they weren't able to do it, I don't know what I would have done. I was in no position to hire staff in the first 12 months. They wanted me to succeed but it also gave them a hobby. My dad still comes in a few times a week to fix things; we call him the maintenance man."

Cat Napping Suburban Retreat
Ebony Centazzo with her parents Jean and Eddie, and the Cat Napping Suburban Retreat team.

Centazzo said her business, which has grown to three locations with eight staff, wouldn't have survived without the help and support of her parents.

"I believe that having them a part of the business from the beginning has been part of its success," she said.

"It would have taken years to save the money to start up the business. As it was we didn't have a landline or internet connected for eight months and I used to take the washing home.

"I only opened with 30 cages and later brought more when I had the cash flow."

Centazzo said she paid her parents back after 11 months.

The convenience of the 'parent bank'

Daniel Brady had attempted to start three e-commerce businesses before he tasted success in 2014 with his Brisbane-based online company Heavenly Hammocks.

"This business plan looked superior to the previous businesses, so I went ahead and gave it a shot," he told HuffPost Australia.

Brady's parents loaned him $15,000 to fund a significant portion of the first and second imports of hammocks and also allowed him to use a room of their house for storage.

"They have given me credit since I was young; around $200 when I was 12 or so to buy a Nintendo 64, and multiple times over the years since then," he said.

Heavenly Hammocks
Daniel Brady's parents were pivotal to the success of his business Heavenly Hammocks.

"I have never failed to pay them back, so they trust me. They know my income and assets, so they knew I would be able to pay them back."

He said it was more convenient to borrow money from his parents than seek a traditional loan.

"My other, most likely option, was selling some of my shares," he said.

"A business loan from a bank would be an unlikely last resort. To take a loan from my parents is quite risk free for both of us, and flexible for me.

"If the business happened to fail, I could pay them back either through my income or selling shares."

Heavenly Hammocks
Brady and William test out one of the hammocks.

Business consultant Daniels said millennials who wanted to pursue self-employment by launching a small business should have a solid business plan and gain as much knowledge of business as they can.

"People go into business knowing how to do a particular job well but they're clueless how to actually run a business which puts them in danger of financial ruin," he said.

"As many as 60 percent of businesses close their doors within four years, according to the ABS."

Shannon Daniels four tips for those thinking about starting their own business

1. Mentor: Connect with an independent mentor who is not a family member. They will be encouraging and realistic and help keep you on track of where you want to be.

2. Milestones: Set Goals. Have big goals and small goals that you can meet in short and long timeframes. This creates focus and keeps you accountable.

3. Financials: Understand everything about your financials. Know how much money is coming in and how much is going out. Have financial goals to work towards.

4. Parental Financial Help: Be cautious going down this path as it can put strain on relationships. If you do borrow from parents, ensure they are treated as shareholders and remember you are accountable.