Shropshire businesses who need a vital cash injection could find
the answer is closer to home than they think.
Stuart Haynes, from Martin-Kaye LLP Solicitors, in Telford, 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."
Stuart 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."
Stuart 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.
"You will be charged administration fees for transferring
pension funds, and although these are unlikely to be expensive
enough to make this type of scheme unworkable, you should always
find out how much you'll have to pay before going ahead."
And Stuart said companies could raise more cash if they owned or
leased a property, including their own trading premises.
"The lease or freehold can be sold to your pension fund, which
must pay you the full market value, and then in return you
will have to pay rent on the property, but the deal means you can
get another major injection of cash.
"Again, like the interest on the loan, the rent will go out of
your company bank account and straight into your pension fund.
"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."
For more information on Martin-Kaye Solicitors visit their
website here: www.martinkaye.co.uk