Running a business often requires additional financial resources. One way to improve a company’s liquidity is to obtain a loan from a shareholder or a board member. This solution may be more accessible and flexible than a bank loan, but it requires compliance with specific formalities. Below, we present key information in a Q&A format to explain how to properly carry out this process. 

What is a loan granted to a company by a shareholder? 

A loan from a shareholder is a form of financing in which a person holding shares in a company provides financial resources to it under specified conditions. It can be either interest-bearing or interest-free; however, tax consequences should be considered when determining the terms of this transaction. 

What other financing methods are available for a company? 

Besides loans, a company can be capitalized through: 

• increasing share capital – permanently increasing the company’s resources, 

• shareholder contributions – temporary financial support, which must be provided for in the company’s agreement. 

What are the advantages and disadvantages of a loan from a shareholder? 

Advantages: 

• Quick access to capital without involving external institutions, 

• Flexibility in determining repayment terms, 

• No need for complicated credit procedures. 

Disadvantages: 

• Need to meet formal tax requirements, 

• Possible tax implications, 

• Risk of conflicts in case of repayment issues. 

Are there any restrictions on the loan amount?

From a civil law perspective, there are no restrictions on the maximum loan amount. However, in terms of tax regulations, interest determination and limits on deducting interest from income should be considered. 

What should a loan agreement look like?

For loans exceeding 1,000 PLN, a documentary form is required. However, it is recommended to draft a written agreement that clearly defines the loan terms and secures both parties’ interests. 

What elements should a loan agreement contain?

• The parties’ details, 

• The loan amount and method of disbursement, 

• Interest rate or its absence, 

• Repayment terms and deadlines, 

• Liability clauses for non-performance of obligations.

Is it necessary to specify the purpose of the loan?

There is no obligation to specify how the loan will be used.

What are the repayment terms for the loan? 

Repayment can be made in installments or as a lump sum, depending on the agreed terms.

What should be the loan repayment period?

If no repayment period is specified, the borrower must return the loan within six weeks after the lender’s notice. However, market practice and tax regulations indicate that a standard term is up to 5 years.

What should be the loan interest rate?

The interest rate should comply with applicable regulations and safe harbor rules to avoid tax issues. The rates depend on the Ministry of Finance’s current guidelines.

Is the loan subject to PCC tax?

A loan granted by a shareholder to a limited liability company is exempt from the civil law transaction tax (PCC). However, loans from other entities may be subject to a 0.5% PCC tax.

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How should the loan be recorded in accounting?

Loans should be properly recorded in the company’s financial documentation, in accordance with regulations concerning financial obligations.

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Does the loan constitute company revenue?

No, funds received under a loan are not treated as taxable income since they are considered a repayable obligation.

Can loan repayment be a tax-deductible expense? 

The repayment of the principal itself is not deductible, but interest payments may qualify as tax-deductible expenses if they meet the necessary criteria.

Is the loan subject to VAT?

Granting loans is VAT-exempt unless the lender is a VAT taxpayer engaged in financial services. 

What is the procedure for granting a loan?

1. The borrower and lender agree on loan terms.

2. Shareholders usually adopt a resolution authorizing the loan, which is essential when the lender is a board member or when the loan exceeds certain thresholds. 

3. The board or an appointed proxy (if the lender is a board member) signs the loan agreement on behalf of the company.

4. Funds are transferred.

5. The loan is recorded in the company’s accounts.

6. Repayment is made according to agreed terms.

Does the company need approval to sign a loan agreement?

If the lender is a board member, shareholder approval is required, along with the appointment of a proxy to sign the agreement.

What obligations does the company have after repaying the loan?

If the lender is an individual, the company must prepare a PIT-8AR tax return for the tax office, recognizing interest payments as the lender’s income. 

Loan agreement template

A loan agreement template is available, which can be customized to individual needs. It includes, for example, a scenario where the lender is a shareholder serving as the company’s president and the borrower is the company. 

Documents should be tailored to the specific situation to ensure compliance with regulations and transaction security. 

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