I just responded to another article you did on the same subject. I have been investing in a limited company for three years now and you do not need a written director`s credit contract if you/your partner own the limited company 100%. However, it might be useful for a joint venture, perhaps to formalize the agreement. A director is not required to sign a credit agreement if he borrows money from his business. Borrowing terms can be agreed orally or simply implicitly. However, in some situations, a director is required by the right of corporations to obtain shareholder approval before borrowing money. Documenting an intragroup loan from a parent/director/shareholder company to the company is generally easier with less stringent loss provisions than for normal commercial loans. The amount of the intragroup loan is allocated to a situation in which the borrower may not be able to repay the loan if it is to be repaid and the lender may not receive the reasonable value of the viability of the risk. Most agreements provide that in the event of one of the reported events, the Bank may terminate the outstanding facility and/or declare the loan immediately due and payable. Generally speaking, a borrower should, where possible, negotiate "grace periods" that assume that the borrower is informed of the corresponding breach and not just when the offence in question occurs. The borrower should also note that the loan can only be accelerated if the relevant default has occurred "and continues." Otherwise, the banks might be able to accelerate even though the offence in question had been corrected, which would be totally unfair. Shareholder agreement (usually formal) is only required for directors` loans of more than $10,000 (the limit is $50,000 to cover the company`s expenses).

But in all situations where a company lends money to a director, we recommend establishing a written agreement specifying the most important conditions. Beyond everything else, it will prove the existence of a loan in which HMRC researches. Use and modify, if necessary, our standard credit contract for all company-to-director loans. If you don`t want to follow the formal route, simply transfer the funds from your personal bank account to the company`s bank account and register the right accounting positions in your corporate accounts.