Loaning Funds to Your Own Business

[Alvin Pereira]

Hi my BP Family! I've been wondering how I can go about loaning funds to my own company as an "investor" although I'm also the owner. Essentially, as an individual I go get a personal loan. I loan the money out to my business so that it can acquire properties. The business pays me "the individual" back so I can pay the bank back. Has anyone ever done something similar? PS - My new company is just a few months old therefore it won't qualify for a business loan, hence why I thought of me getting a loan under my name. Thanks for the help! - Alvin

[Stephen Chittenden]

From a tax perspective, assuming you are the sole owner and the LLC is disregarded, you and the LLC are one and the same. Rather than doing a loan, you could record the transaction on the LLC's books as a capital contribution. You can then have the LLC make the payments on the loan from the bank. Just document what you're doing, make sure the loan proceeds go into the LLC's bank account, and then record each payment as a reduction in your capital account.