Introduction to this document

Company director’s loan agreement

Your company has agreed to make a loan to one of the directors. Use our model loan agreement to get the terms agreed in writing.

Helping hand

Loans to directors are permitted, as long as the shareholders are given basic information about them and they consent to them being made. Often, the terms of such loans are not formalised, which is fine while the going is good but can cause problems if the director fails to repay the loan, or ceases to be a director of the company.

It’s always a good idea to formalise transactions like loans in writing, to create a record of what has been agreed so that everybody knows where they stand. It also makes it easier for each party to rely on their rights if things go wrong.

Terms

Our model sets out the basic terms that would usually be found in such an agreement. You may choose to take out some terms that are not applicable, add to it or change it as necessary. The repayment terms and interest provisions will need to be tailored to each case. The model provides for it to be repaid in one go on a specified date. Alternatively, the agreement could set out repayment instalments, or simply make the loan repayable on demand.

 

Document

Company director's loan agreement

24 Oct 2018
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