borrow from the company without really doing so

Today we just structured loan for the client in a way that worked out a lot better for them. The client is a successful family owned small business in Victoria. They wanted to buy an awesome beach vacation property and maybe one day retire there. What an awesome story. They had most of the value sitting inside their company, but as you may already know if you took that money out of the company it will become a taxable dividend or salary for the shareholder.

Getting a personal loan for a vacation property, combined with being a small business owner, is really difficult generally. Most business owners are perceived to be more risky than a salaried employee when it comes to obtaining a loan from the bank.

So you’ve been doing business as a corporation for years and years and the company looks great on your financial statements, but the bank is still going to look at you with an air of risk. Hey I get it, it’s not fair but that’s just what we’ve seen with the banks. What do you do?

After talking with the bankers, the investment advisers, and the owner, we found the perfect solution was that the bank issue the loan to the owner personally, but the collateral was the company’s excess assets. This may not necessarily work for you, I’d recommend you talk to your accountant about whether you could do this or not. In fact we only did this because of this client’s very very specific circumstances. In doing so we probably saved the client hundreds of thousands of dollars in taxes. Talk to your accountant, or talk to us, send us a message on the form.


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