Director's loan agreement template
A director's loan agreement records a loan from a company to one of its directors: the amount and purpose, how it was approved, any interest, and how and when it is repaid. It follows the Companies Act approval rules, with board approval for small loans and business expenditure and members' approval otherwise, and sets out when the whole loan falls due. Accountants and owner-managed companies prepare one for each loan, with the director, the amount and the repayment plan changing each time.
Made by DocuWeave. Use at your own discretion.
What changes each time
12 values. Everything else is your wording, kept exactly.
The parties
- Company, number and registered office
- Director and home address
- Who signs for the company
The loan
- Amount and purpose
- How and when it is paid
- Approval
Interest and repayment
- Interest
- Repayment
- Repayment schedule
- Set-off against
Default
- Days late before the whole loan is due
- Director also an employee
The rules it usually needs
Written in plain English when the template is set up.
- One of several wordings
“State how the loan was approved: a small loan or business expenditure approved by the board, or members' approval, with or without the holding company.”
The loan and everything else lent to the director came to under £10,000, so the small loan wording with the board meeting date was used.
- One of several wordings
“Make the loan interest-free, or set the interest rate and when it is paid.”
The board minutes set 3.75% a year paid with each repayment, so the interest-bearing wording was used.
- Only when…
“Include the repayment schedule only when the loan is repaid in instalments.”
Repayment was in four quarterly instalments, so the schedule was included with four rows.
- The AI decides from the paperwork
“Include a company secretary's signature only if the director is the company's only director.”
There were two directors, so the other director signs for the company and the extra signature was left out.
One worked example, start to finish
The director's loan agreement in DocuWeave, from upload to approval.
1The document uploaded
The director's loan agreement, a Word file, uploaded as it is.
- 2
The template it became
It found 30 sections and 31 values, and asked 19 questions before publishing. Interest is a choice: interest-free or interest-bearing.
3The paperwork dropped in
The board minutes, the accountant's repayment plan and the director's loan account extract.
4What was found, with sources
21 of 30 values filled from the paperwork, each with the passage it came from.
5What it asked
5 things for a person, starting with the company, and the amount and rate to confirm.
6The approved output
Approved, with Word and PDF downloads.
A free director's loan agreement to download
- Director's loan agreement, filled with fictional details (Word)
- Director's loan agreement, filled with fictional details (PDF)
Use it as it is, or upload it to DocuWeave and make it a template.
DocuWeave is not a law firm. A general template for common situations in England and Wales. It is not tailored to you and we do not update it when the law changes, so check it suits your situation before you use it. Terms.
Made by DocuWeave. Use at your own discretion.
Questions people ask
Does a loan to a director need shareholder approval?
Generally yes, by ordinary resolution after a memorandum is given to members. There are exceptions, including loans up to £10,000 in total and funding for business expenditure up to £50,000, which the board can approve.
Does a director's loan have to charge interest?
No, but an interest-free or cheap loan can be a taxable benefit for the director. This agreement lets the company choose interest-free or a stated rate.
What are the tax consequences of a director's loan?
They depend on the amount and when it is repaid, and can affect both the company and the director. The agreement records that each has had the chance to take advice.
Can the director vote on the loan?
Under this agreement the director takes no part in board decisions about enforcing or varying it, unless the company's articles allow it.
Use this template
It opens in DocuWeave as a template you can check, change and publish. Nothing is used until you do.