Lending your own money to your company

Why directors lend to their own company

In the early days or a tight patch, directors often bankroll the company from personal funds — covering a supplier, funding stock, bridging a gap. Recorded as a credit director's loan account, it's the company owing you. It's the cheapest, most flexible funding a small company can have: no application, no lender, entirely on your terms.

How the credit loan account works

Money you put in is logged as a credit balance — the company's debt to you. You can draw it back down whenever the company has the cash, and because you're simply reclaiming your own money, the repayment is tax-free. Keep it documented and reconciled so the balance is always clear. See how to run a loan account properly.

Charging the company interest

You can charge your company interest on the loan, which can be a modest way to extract value. The interest is a deductible cost for the company but taxable income for you, reported on your self-assessment (with the company handling any tax to deduct at source). It only makes sense where the numbers work — for many, an interest-free loan is simpler.

When it's better to borrow externally

A director's loan is ideal for modest, short-term support — but it has limits. It ties up your personal cash, which you may need yourself, and it doesn't scale to fund real growth. When the need is larger or longer, external funding keeps your own money free and the borrowing on the company. Credicorp lends to the company, not to you personally, with no personal guarantee. Consider subordinating your loan to strengthen a bank facility.

Keep it clean

The one rule that matters: document every movement and reconcile regularly, so the balance never becomes a muddle. A clean credit loan account is a quiet strength on your books; a tangled one is a headache at year end. See the director's loan account explained, and size any external need with the working capital calculator.