Director's Loan Investment

[confused90]

Hello,

I just have a few queries about investment through director's loan. I've gone through the guidance, and Page 22 suggests this:-

iii) Director’s loan
If you have made the investment in the form of a director’s loan, it must be shown in the relevant set of accounts provided, and you must also provide a legal agreement, between you (in the name that appears on the application) and the company.
This agreement should show:
• the terms of the loan;
• any interest that is payable;
• the period of the loan; and
• that the loan is unsecured and subordinated in favour of third-party creditors.

All the points are crystal clear, except the period of the loan.

My business is a trading business and I have transferred money from my personal account to my business account. I shall purchase goods, sell them to clients and recieve payment from them.

Can I use the payments recieved from the clients, to pay off my director's loan? would UKBA later have an issue, as UKBA does not have a specific period mentioned for the director's loan.
[/u]

[helpingperson]

Hello,

I just have a few queries about investment through director's loan. I've gone through the guidance, and Page 22 suggests this:-

iii) Director’s loan
If you have made the investment in the form of a director’s loan, it must be shown in the relevant set of accounts provided, and you must also provide a legal agreement, between you (in the name that appears on the application) and the company.
This agreement should show:
• the terms of the loan;
• any interest that is payable;
• the period of the loan; and
• that the loan is unsecured and subordinated in favour of third-party creditors.

All the points are crystal clear, except the period of the loan.

My business is a trading business and I have transferred money from my personal account to my business account. I shall purchase goods, sell them to clients and recieve payment from them.

Can I use the payments recieved from the clients, to pay off my director's loan? would UKBA later have an issue, as UKBA does not have a specific period mentioned for the director's loan.
[/u]

This is very good question, can anyone please answer or comment on this?

[top]

Dear Friend it is clear same as you find other points crystal clear.
any investment in form of director's loan is a continue investment (this cannot be shown on agreement (unless you have fully invested the required amount) but ledgers you provide summarizing the amount invited till the date of application) when a company you lending can pay back stays unspecified but there has to be time mentioned on the agreement because it depends on when this company begins to make profit and pays back third part creditors before director's loan using director's loan or profit a company potentially would make.

You need to design a director’s loan agreement in accordance with what is required on it which should explain how you lend(term of lending) this company and how long this lending is for following further instructions which includes if any interest will be charged against being lent amount.

Hope above helps..