Hartsfield Loans

Loans

“Spectacular achievement is always preceded by unspectacular preparation.” Robert H. Schuller

There are many advantages to a SSAS, but one which isn’t available with other types of pension, including SIPPs, is a ‘connected-party loan’ – sometimes known as ‘pension-led funding’ and this can, under the right circumstances, be a highly beneficial investment for all parties.

So what does this mean?

Put simply, this loan option is one which is available to any participating employer in the pension and provides a source of business funding without having to seek investment from a third party, such as a bank. And the beauty of it is you have a high degree of control and security.

How does it work?

A loan is paid from the pension fund to your business and your business pays a commercial rate of interest on this loan back into your pension fund. So while your company has the investment it needs, at the same time your pension is growing from the interest payments.

The loan has to meet five key tests details of which can be found here. An important key test is to establish what security will be provided for the loan, but this is where our expertise at Hartsfield comes into its own.

We will carry out all the necessary work, diligently ensuring the loan meets the key tests; the number crunching, regulatory and – we’ll be honest – unglamorous, behind the scenes work which brings about the perfect solution to benefit both your business and your pension fund.

You should be aware that HM Revenue & Customs requires regular capital repayments on all connected-party loans over a maximum term of 5 years and restrictions apply on the amount that can be borrowed by the participating employer.

Loans can also be made to third parties, but slightly different conditions apply.

If you would like further information, our comprehensive guide can be found here.