Stuart Haynes, the well regarded Head of Martin Kaye’s Commercial and Corporate Department, who is recommended in Legal 500 for his legal expertise, said despite the banks relaxing their rules, borrowing was still not an easy option for many companies. "So if you need to expand your business or need cash to invest in new equipment, you may find you have to consider alternative options."
Mr Haynes said one possibility could be setting up a pension known as a Small Self-Administered Scheme (SSAS).
"They are designed specifically for small to medium-sized companies with a small number of director/shareholders - or even just one if you're a sole trader. This kind of scheme is allowed to lend to businesses where the pension fund holder is a director/shareholder, which is different from other types of pension fund."
Mr Haynes said there was no specific limit on how much an SSAS could lend your company, but it couldn't lend more than 50% of its net assets. "Your company would have to pay a commercial rate of interest on the loan, but of course the money will go straight from your business into your own pension account, so it's effectively costing you nothing."
He said an existing pension fund could be transferred into an SSAS and your company could immediately access a loan worth up to 50% of what the fund was worth.
"There are many companies who can set up a fund like this for you, but it's vital to take professional advice in order to avoid any pitfalls and mistakes.”
Martin Kaye is a law firm that has supported large and small businesses in Shropshire and across the Midlands and Mid Wales for over 25 years, and as a result has developed a wide range of experience and expertise over that time, including intellectual property, succession planning, debt recovery, corporate services and international business. To find out more about the Telford Business Law Firm, visit http://www.martinkaye.co.uk/
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Martin-Kaye LLP is one of the West Midlands fastest growing legal practices. Based in Telford, the firm boasts a number of specialist departments with a particular focus on commercial and business law.