Are You a Business Owner With A Director’s Loan?

Kylie Greeff
16th January 2018

Are you a director who has lent money to your business as a director’s loan? Are you using the IFISA to save you tax on the interest repayments of this loan?

Many successful entrepreneurs and business owners know what it means to have skin in the game. Funding their business through their own finances is often the cheapest and most cost-effective way for a business owner to raise capital – and sometimes it can be the only way.

Owners backing their own businesses are often looked on favourably by prospective lenders, not only on peer-to-peer platforms such as ours, but also in the eyes of external parties considering either debt or equity options.

The problem for you as a business owner is that while you’re busy looking after the finances of your business, there’s a chance you’ve overlooked some opportunities to save yourself money, by missing out on some of the key cost- and tax-saving mechanisms available to you.


Whilst many directors do support their business through interest-free director loans, if you have charged interest to the business, you will be paying income tax on this interest. The new Innovative Finance ISA allows business owners like you to support your business by formalising your director’s loan on a P2P platform and benefitting from the IFISA tax saving, thus earning tax-free interest on this income.

Directors can make use of their IFISA tax allowance through by either participating in a loan listed on our primary marketplace[1] or through a privately syndicated loan[2] formalised by the platform.

By supporting your business through a director’s loan on, you could, over a period of two years, on a director’s loan of £200k lent at 12.5%, save £5,630.03[3]

To find out more, begin the formalisation process by completing our loan application process, or call us on 0113 8150 244.

[1] This is available to directors whose business meets our standard lending criteria and is approved for listing by our credit committee as if it were any other business applying for finance.
[2] This loan would not be made visible on the main marketplace and only you, fellow directors and lenders who are connected to you may participate in the loan.
[3] Based on higher rate taxpayer at 40%. Net of fees. Fees 3.25% of loan amount.

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