1. The loan may be repaid by “specific periodic amounts,” which means that the shareholder (or “shareholder”) agrees on an amount that the company pays to the shareholder (or “shareholder”) at agreed intervals. Shareholder lending is a faster and more flexible form of financing that companies could find if they cannot afford or do not have the time to do so. In addition, it is also of the cheaper form, because sometimes no interest rates are collected, and it acts as a long-term cushion if sanctioned for an indefinite period. Both the lender and the borrower must be careful about its tax consequences and related formalities, as the IRS maintains a precise overview of this financing for any form of tax evasion. The shareholder (or “shareholder”) is the party that prefers the money to the company, provided the group repays the loan in the future. The shareholder (or “shareholder”) also holds shares in the company. For the purposes of the loan, the shareholder (or “shareholder”) is treated like any other debtor or lender. A debt loan must only be paid when the shareholder (or “shareholder”) requests the refund. There is no fixed deadline for repayment of the loan. Upon request, the company has a reasonable period of time to repay the entire loan. Although it is substantially similar to the loan agreement of our directors – loans to a company – this proposal presents important differences, including other conditions that specify the terms of granting of loans. The goal is to better protect a shareholder who does not have the same access to knowledge or information as a director who lends to a company.
Both contracts prove a debt that a borrower owes to a lender, but a bond may be between two parties. The shareholder credit contract is used when a company borrows money from one of its shareholders (or “shareholders”). Interest is an amount charged to the company (the borrower) for the use of the shareholder`s money. It is generally expressed as a percentage of the amount borrowed and calculated during the loan at a specified interval. The interest rate is the annual interest rate. The investor is the initial amount of the loan paid by the shareholder (or “shareholder”) to the company at the time of the loan, before interest is in place. Once the company has begun to repay the loan, the amount of capital relates to the amount that still goes to the shareholder (or “shareholder”) at a given time.