Agreement for a loan to a company director

What’s an agreement for a loan to a company director and when do you need one?

This loan agreement is suitable for where a company gives a loan to one of its directors.

It is only suitable for use in England and Wales.

If you’re planning to put in place a loan arrangements where one or both of the parties are based outside of England and Wales, you will need a different template – get in touch if that’s the case, as we don’t have one of those just yet, but we can prioritise it if you need it!

If your company is planning to make a loan to one of its directors, there are other key steps involved in making sure that this arrangement is legally robust.

Before making a loan to someone (taking into consideration the amount of the loan) consider the following:

  • loans to an individual are heavily regulated.

  • Carry out credit checks on the individual borrower]

  • Consider the salary received (and any dividends if also a shareholder) by the borrower and whether this is likely to be enough to cover the loan repayments and their other usual outgoings

  • Make sure you’re clear on whether you want to require any security for the loan