Make and save money by documenting a loan agreement

Credi Fairy dancing. Only fools chase the money fairy

How to make and save money documenting a related party loan

Documenting a loan agreement to a related party is crucial – so why is it so rarely done? It’s the nature of the relationship between the parties to the loan that puts this important piece of administration onto the “do it tomorrow“ list. Organising a documented loan with a friend or business partner changes the relationship from a personal to a business relationship. Then there is the prospect of seeking formal advice and negotiation which could result in disagreements and friction. It all sounds too hard; ‘we’ll be alright…right?’

Relationship loans are a huge part of the Small to Medium Enterprise (SME) landscape. Businesses borrow billions of pounds from related parties to support their ambitions, yet fail to recognise the material risk to the transaction when they remain undocumented, leaving the ambiguity of a long forgotten conversation to raise its ugly head down the track. The relationship that underpinned the loan is then threatened, and may even break.

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Source: http://xumagazine.com


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