Founder Loans: Can I Lend Money to My Company?

Yes. As the owner of a company, you may lend money to your company. This is a common way to provide short-term liquidity when the company lacks funds for current operations.

In practice, this means that you lend your personal funds to the company, and the company becomes indebted to you as an individual. The funds may be used for invoices, procurement of goods and services, salaries and other business obligations.

To formalize the transaction, it is advisable to conclude a written loan agreement between you as the lender and the company as the borrower. The agreement should define the amount of the loan, the repayment deadline, any interest, and other relevant terms.

Such a loan can be useful because the company obtains funds quickly, the terms are flexible, and no bank credit approval process is required.

As a rule, the loan itself is not taxed, but any interest may be subject to taxation. The repayment of the loan should also follow the agreed terms and be properly recorded in the accounting books.