Loan to a friend from LTD

[kolata]

Hi
I have a friend who needs some money.
Since I have some funds in my co's account, I was wondering if I can give him a loan from the LTD of £15000. Like directors loan, but to a friend that has nothing to do with LTD.
I will charge him 3% interest and the loan will be repaid within 9 months after LTD year end.

In the past I received a loan from the company I was employee at at no interest at all, but it was less that 10000.

Is this legal/allowed at all?

[Lance]

Hi
I have a friend who needs some money.
Since I have some funds in my co's account, I was wondering if I can give him a loan from the LTD of £15000. Like directors loan, but to a friend that has nothing to do with LTD.
I will charge him 3% interest and the loan will be repaid within 9 months after LTD year end.

In the past I received a loan from the company I was employee at at no interest at all, but it was less that 10000.

Is this legal/allowed at all?

It would change the nature of your business. Therefore I think it's probably not allowed.
You could setup a new LTD co, where the current co. is the sole owner and director. It sets it up with the £15k capital (+ some for expenses). New Co. would probably have to be regulated by the FCA as well as a provider of credit.

Sounds very messy. Why not charge him 7.5% interest, take it as divis and loan it personally?

[Lance]

It would change the nature of your business. Therefore I think it's probably not allowed.
You could setup a new LTD co, where the current co. is the sole owner and director. It sets it up with the £15k capital (+ some for expenses). New Co. would probably have to be regulated by the FCA as well as a provider of credit.

Sounds very messy. Why not charge him 7.5% interest, take it as divis and loan it personally?

or take it as a directors loan and lend it to him personally. You'll have to pay some BIK tax on that. Check with your accountant how much.

[SueEllen]

If you want to gain an enemy lend your friend the money, otherwise give it as a gift. If you can't afford that then don't lend the money.

[stek]

Neither a borrower nor lender be.

And certainly not with 'friends'...

[MrMarkyMark]

Good points, I would say in addition, if you can't afford to ultimately lose it then don't lend it.

Actually...................I'm a far better bet and I need £30K, how about you get the loan for me instead

[missinggreenfields]

Never mix business and friendship.

If you must, I would take the loan myself from the company and then give him a loan directly rather than involving your business in your friendship.

[kolata]

I see your concern about the friend.
Read friend = my wife's mother. Wife is 49% share holder in ltd.

How's this setup?

[SueEllen]

Good points, I would say in addition, if you can't afford to ultimately lose it then don't lend it.

Actually...................I'm a far better bet and I need £30K, how about you get the loan for me instead

Shamefully this is true. As the OP doesn't know you it will be a full commercial arrangement.

[missinggreenfields]

I see your concern about the friend.
Read friend = my wife's mother. Wife is 49% share holder in ltd.

How's this setup?

Even more stupid to lend money to a parent / in-law and charge interest. Pay some dividends and let your wife support her mother from those.