The need to discount non market rate loans for FRS102 is, undoubtedly a nuisance and arguably of little relevance to SME reporting.
Two thoughts and questions for the assembled wisdom of Aweb.
First, for a typical SME what is the market rate of interest? Do you take a view that it's bank rates plus something for risk premium, or of the other way and take a view that most participator lending is interest free - the reward is via dividend, capital growth, etc, and thus the market rate is 0% (ignore for a moment the tax implication that interest may be more efficient than dividend anyway in 16/17)
Secondly, is an incredit directors current account, say with some declared but indrawn dividend in it, maybe with some funds out in when the company was short, actually lending? Or is it just that, a current account?
I'm obviously looking at ways of not having to discount across a client portfolio of largely incorporated SMEs.
I would welcome thoughts.