Shareholder loan is a debt-like form of financing provided by shareholders. Usually, it is the most junior debt in the company's debt portfolio. On the other hand, if this loan belongs to shareholders it could be treated as equity.[1] Maturity of shareholder loans is long with low or deferred interest payments. Sometimes, shareholder loan is confused with the inverse, a loan from a company that is extended to its shareholders.
Applications
- This form of financing is quite common while funding young companies with positive cash flows because such firms are still not able to raise debt from banks but need debt anyway to create a tax shield.
- The contribution of shareholder loans to a corporation's capital structure generally relieves the corporation's debt load and is, therefore, used in leveraged buyouts to manage a degree of leverage.
- Shareholders can extend the loan in distressed or near-default situations to save the company.[2]
See also
References
External links
🔥 Top keywords: Main PageSpecial:SearchPage 3Wikipedia:Featured picturesHouse of the DragonUEFA Euro 2024Bryson DeChambeauJuneteenthInside Out 2Eid al-AdhaCleopatraDeaths in 2024Merrily We Roll Along (musical)Jonathan GroffJude Bellingham.xxx77th Tony AwardsBridgertonGary PlauchéKylian MbappéDaniel RadcliffeUEFA European Championship2024 ICC Men's T20 World CupUnit 731The Boys (TV series)Rory McIlroyN'Golo KantéUEFA Euro 2020YouTubeRomelu LukakuOpinion polling for the 2024 United Kingdom general electionThe Boys season 4Romania national football teamNicola CoughlanStereophonic (play)Gene WilderErin DarkeAntoine GriezmannProject 2025