Protecting Yourself When Lending Money to Your Company

Relevant For:

Company owners and directors lending personal funds to their businesses.

Key Points:

• Always use a formal loan agreement to clearly outline repayment terms.
• Secure loans against tangible company assets to reduce risk.
• Promptly register security interests on the PPSR to maintain priority.
• Loans funding employee obligations may receive priority over unsecured creditors.

Full Article:

Company owners and directors often face the challenging decision to personally lend money to their businesses, either to overcome financial hurdles or drive growth. While this is a common scenario for small-to-medium business owners, it comes with significant risks if proper safeguards aren't implemented.

At Munro’s, we know that clearly documenting these financial arrangements can reduce your personal risk and protect your investment. Here’s what directors should consider before lending money to their company.