Commercial loan being issued for private property - is this legal

Commercial loan being issued for private...

Didn't find your answer?

Directors of a business want to purchase property in their own names. The property will be used solely for use by the business. To enable the loan to be made at commercial rates the loan company say the loan has to be made to the company. The value of the loan will be £225,000.

My initial thoughts were that the directors borrow the money from the company as a loan to purchase the property and repay when they sell it within 6 months. However, now having read the restrictions on loans to directors from the Companies Act and ICTA s149 am I correct in saying that this would be illegal or is there an exemption available since the loan is for legitimate business purposes?
Delyth Bending

Replies (1)

Please login or register to join the discussion.

avatar
By AnonymousUser
06th Apr 2005 15:23

Would have thought
that a Buy-to-Let loan would be the cheapest alternative in those circumstances. No reason why a loan on a Commercial Property cannot be in the names of the Directors.

Thanks (0)