Invested in shares vs director loan agreement INTIAL APP

entrepreneur123 · Post by **entrepreneur123** » Tue Jul 23, 2013 11:29 am

hi,
Sorry if it been discussed here before. Could anyone please tell me is it better or easier to invest money in business through shares or director loan agreement? thanks

Legal83 · Post by **Legal83** » Tue Jul 23, 2013 9:44 pm

Share investment, is a investment, director loan is a investment if you were already running a company as a director, and your business borrowed money from you, its actually a loan to your business which you are already running. its my opinion but accountancy term Share investment.

entrepreneur123 · Post by **entrepreneur123** » Wed Jul 24, 2013 9:51 am

thanks for your reply. Sorry for not explaining well. Actually,my question was specfic for intial application, is it better to show invested funds as shares or director loan for my intial application after transfering money in business account? i personally think shares investment will be better(by following policy guidance) as under director loan UKBA might find something wrong, as there will be terms and conditions etc in agreement.
any suggestions pls ?

Legal83 wrote:Share investment, is a investment, director loan is a investment if you were already running a company as a director, and your business borrowed money from you, its actually a loan to your business which you are already running. its my opinion but accountancy term Share investment.

Legal83 · Post by **Legal83** » Wed Jul 24, 2013 11:13 pm

I contacted 3-5 accountants / chartered accountants, what they said in accountancy term only share investment counts, may be UKBA will change the rules later on, regarding director loan, bcz then any one can give a loan a become a director of company which is paid director, not the owner, I would suggest you to do share investment to avoid any hassle.

tuhc · Post by **tuhc** » Wed Jul 24, 2013 11:28 pm

Hi legal 83, UKBA just want to invest 50k in uk economy doesn't matter they are in share capital form or director loan, but if you want to save money on corporation tax and other business taxes, which you need to summit each year to HMRC then you should go with director loan.

entrepreneur123 · Post by **entrepreneur123** » Thu Jul 25, 2013 12:11 pm

Thanks tuhc and legal83 for your advice. I got 50k in my personal account at the moment, my company will be 2 months old before application submission. Do you guys think it will be better if i apply by keeping 50k in my personal account OR transfer it to my business account then show it as invested under shares investment with accountant certificate? any advice will be helpful thanks

Legal83 wrote:I contacted 3-5 accountants / chartered accountants, what they said in accountancy term only share investment counts, may be UKBA will change the rules later on, regarding director loan, bcz then any one can give a loan a become a director of company which is paid director, not the owner, I would suggest you to do share investment to avoid any hassle.

Legal83 · Post by **Legal83** » Thu Jul 25, 2013 10:14 pm

@tuhc,,, My question is "I think you can go for a director loan option if you are already running a business before you submit application, I think you can't jump in to any other running business as director loan", you can jump in any other business as share investment, no doubt,,,, its confusing,

Legal83 · Post by **Legal83** » Thu Jul 25, 2013 10:16 pm

@ent123, once you transferred 50k in to your business account, your investment done, then its your business money, then you don't need to worry for share etc, transferred 50k in business and you are free from investment issue, your investment done.

Entrepreneur9 · Post by **Entrepreneur9** » Fri Jul 26, 2013 12:10 am

Legal83 - If he transfers 50k in business during initial application then investment is done. Yes I agree with you.

But what will happen during the extension? Do we need to show the same paperwork that 50k was invested in July 2013 as directors loan during initial application. Or is there something else we need to submit? do we need to invest again?

Can you please throw some light here, thanks

Legal83 wrote:@ent123, once you transferred 50k in to your business account, your investment done, then its your business money, then you don't need to worry for share etc, transferred 50k in business and you are free from investment issue, your investment done.

Legal83 · Post by **Legal83** » Fri Jul 26, 2013 2:50 am

if you choose director loan, then you have to show legal agreement, or term and conditions of it... its complicated at the time of extension.

but if you choose share investment, then its straight forward and clear, don't forget the element that you have to show that due to your investment, 2 full time jobs created.

if you transferred 50k in business account, then simply run the business, get some help from accountant, you will be on the path, to run the business successfully, why I am not suggesting director loan? Ans: I am sure may be after 1-2 years or may be early UKBA will re-consider director loan path or delete this sort of investment. its better to choose the right way from the day one.

entrepreneur123 · Post by **entrepreneur123** » Mon Jul 29, 2013 10:09 am

thanks for your reply Legal83 but could you pls help me to understand following from policy guidance from page 40, what i can understand is, investment will not count by merely transfering money in business account. thanks

"Money should be fully used in the business and not held in the business bank account in order to
qualify for the award of points
Money deposited in a bank account, even if it is in a United Kingdom business bank account, is
not counted as investment in business. The money should be used in the business to encourage
growth or expansion, to improve services or products and to ensure the business is profitable."

Legal83 wrote:@ent123, once you transferred 50k in to your business account, your investment done, then its your business money, then you don't need to worry for share etc, transferred 50k in business and you are free from investment issue, your investment done.

educators · Post by **educators** » Mon Jul 29, 2013 5:12 pm

entrepreneur123 wrote:what i can understand is, investment will not count by merely transfering money in business account.

You are right here

Legal83 · Post by **Legal83** » Mon Jul 29, 2013 11:33 pm

its true, I didn't say that transfer the 50k in business and maintain 50k balance, once you transferred then its your business money, which has to be used to expand it. once you transferred 50k in business, that means investment in to your business. now your business can use this amount, investment side you are safe, Condition of your Visa says, full access to the money unless invested.

Celina · Post by **Celina** » Mon Jul 29, 2013 11:41 pm

Hi
If its so simple then everyone will take same path no one will invest just transfer money and show director loan agrement and invest a bit. I might be wrong but I think you need to INVEST the whole money Please clear me if I am wrong.

entrepreneur123 · Post by **entrepreneur123** » Tue Aug 06, 2013 9:57 am

So in simple words, for intial application, if we transferred 50k in business account and show it along with shares issued then it will count investment. But if we only transfer money in business account and do not show it along with shares issued/director loan, then it will not count towords investment. Correct me if i am wrong. thanks

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Invested in shares vs director loan agreement INTIAL APP

Invested in shares vs director loan agreement INTIAL APP