Business loans for limited liability companies

Limited liability companies are a popular form of business, and at Qred we have already helped some of them with financing.

What is a limited liability company?

A limited company – also abbreviated as A/S is one of the most popular forms of business. Public limited liability companies differ relatively much from, for example, a one-man company or a private limited company.

Above all, it is a question of responsibility, financing and management of the company. In the public limited company, a distinction is made between legal person (the public limited company itself) and natural persons (for example, the Board of Directors and the Director).

It is the natural person who takes out the business loan and is responsible for the payment of the loan.

What are the benefits of lending to a limited company?

By lending to the public limited company, all borrowing costs, such as interest, monthly fees and set-up tax, become deductible. The cost of the business loan therefore reduces the company tax.

Therefore, in some cases it can be very advantageous to borrow money in the company.

By lending money to the limited company, the company is in charge of the loan and the costs are distributed among the owners, where the large shareholders account for a larger part and the small ones for a smaller part.

Loan money to start-up limited company

As a starting point, the borrower is always required to personally pay off the loan to start-ups, which is not particularly strange, as new companies often have quite low turnover. Unfortunately, it is often in the start-up phase that a limited company needs extra money to get the business going.

Loans to the company without being personally liable

In order for a limited company to be approved to borrow money, the owner or another person often has to be personally liable for the loan. This means that you, as a borrower, agree that the repayment claim is incumbent on you and you are able to pay it in full.

It's quite unusual. start-ups are granted a business loan without requiring the owner to be personally liable for the loan.

Requirements for public limited companies

• At least 400,000 share capital must be deposited either as assets or cash
• A limited company must have both an executive board and a board of directors. The Executive Board shall consist of at least one person, while the Board of Directors shall consist of at least three persons;
• Public limited liability companies are required by law to prepare and report an annual report within 5 months of the end of the financial year
• Small businesses may opt out of auditing if the entity meets certain conditions
• You must prepare an owner's book with a listing with the names and addresses of those who own shares in the company

Good to know about the corporate form limited company

• One or more people or companies can start a limited company
• The name of the limited liability company is protected throughout the country
• The general rule is that whoever owns shares only risks losing what you have paid for your shares.