Does your company need a shareholder loan?
When a company needs capital to continue operations or to grow, a shareholder loan can be an effective solution. The loan involves one or more owners lending money to the company. By setting up a clear loan agreement, you can make sure that all loan terms are well-defined and that both the company and the shareholder have a mutual understanding of how to manage the loan.
Shareholder loans can be a flexible option, as they provide the company with funds without the strict terms that banks and financial institutions often impose. And it can be particularly useful if the company is facing temporary liquidity challenges.
How it works
When you set up a shareholder loan, you generally need to create a loan agreement, similar to a promissory note, which regulates the loan terms, including:
- Loan amount
The agreement specifies how much money the company is borrowing. - Loan disbursement
Details on how and when the company will receive the loan funds. - Repayment terms
Terms for how and when the company will repay the loan, including any interest and amortization schedules. - Special conditions
Any specific loan terms, such as whether repayment will only occur when the company reaches a certain revenue or after a set number of years.
Having a clear, written agreement can prevent misunderstandings and make sure that all parties agree on how the loan will be managed.
Several benefits
A shareholder loan offers several advantages for both the company and shareholders:
- Flexibility
The loan can be adapted to suit the company’s specific needs and circumstances, making it a flexible solution. - No impact on ownership structure
Since the loan doesn’t involve the sale of shares, it doesn’t affect the company’s ownership structure. - No credit check
Unlike traditional loans, a shareholder loan doesn’t require a credit check, which can be advantageous if the company has weak liquidity.
What we help with regarding shareholder loans
Legal consultation
We provide legal advice to help you understand all aspects of shareholder loans and how to best use this financing option for your company.
Drafting loan agreements
We’ll help you draft a loan agreement that’s clear, legally binding and defines all terms correctly.
Review of existing agreements
If you already have a loan agreement, we’ll review it to make sure it meets all requirements and protects your interests.
Get legal help today
Do you need help with matters concerning shareholder loans? You can always get in contact with our lawyers within just 24 hours when you need quick answers to your questions. Or you can email or call us whenever you need to hire a lawyer for legal assistance.
FAQ about shareholder loans
Is a shareholder loan always beneficial for the company?
It depends on the company’s situation. The loan can be a good solution when capital is needed quickly, but it’s important to carefully consider all terms.
How are shareholder loans taxed?
The taxation of the loan can vary depending on how the loan is structured and its specific terms. Consulting a tax expert is advisable to understand the tax implications.
Can a shareholder loan impact the relationship between co-owners?
Yes, and that’s why it’s important to have a clear agreement and open communication to avoid conflicts and misunderstandings among co-owners.
