All Topics / Legal & Accounting / Borrowing Money through a Company

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  • Profile photo of AdministratorAdministrator
    Keymaster
    @piadmin
    Join Date: 2013
    Post Count: 3,225
    June 21, 2005 - 11:24 pm

    I have just read the Wealth Creator resource. It’s a fantastic read and very easy to understand for non-tax expert investors such as myself.

    I just have one question Im hoping someone can help with w.r.t. borrowing money through a company.

    The resources suggested that the company can borrow money based on the private income of the directors going as guarantor. It is income, or does it mean savings?

    For example, if my normal salary and investment income per year is $150K, but I have very little liquid/cash savings left, will the banks still lend based on the $150K, and not take into account the zero savings? If it is based on income and provided my income remains at $150K or higher, does this mean I should always be able to get more “good debt” to continue investing?

    Thanks,
    B

    Profile photo of GreatPigGreatPig
    Member
    @greatpig
    Join Date: 2004
    Post Count: 284
    June 22, 2005 - 11:49 am

    I haven’t seen that resource, but I would imagine that if the directors act as guarantors, then the company would be able to borrow much the same as the directors could personally.

    And one thing to consider regarding “investing” (as opposed to doing business) in a company is that you’ll lose the 50% CGT discount for investments held for more than 12 months. Other structures may be more suitable for investments.

    These are just my personal opinions and should not be construed as advice.

    GP

    Profile photo of Mobile MortgageMobile Mortgage
    Member
    @mobile-mortgage
    Join Date: 2003
    Post Count: 913
    June 22, 2005 - 3:48 pm

    Hi B,
    Regarding borrowing through a company, most credit providers will require directors guarantees, servicing/qualifying will rely on income much the same as a standard finance application,
    some degree of savings may be required depending on the type of finance product LVR or lender, again much the same requirements as a standard loan application,

    As Great Pig suggested, another type of structure may be more suitable, perhaps a Trust of some sort, Cheers.

    Regards
    Steven Crane
    Mortgage Broker

    Mobile Mortgage Market
    Ph: 0402 483 216
    [email protected]
    http://www.mobilemortgagemarket.com.au

    PLEASE note comments made should not be taken as specific taxation, financial, legal or investment advice.

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