Director's Loan Extension Question

[AdamR]

Hi Gurus,

I've read through multiple pages of the forum and the guide, but can't find an answer for this specific question. I'm looking to join some business partners in an existing venture in London that is doing quite well - bringing in revenues of 400K+. I'll spend about 50K buying shares of the company, but was planning out how to structure the investment of the other 150K. I'm not wealthy enough to just invest the entire 160K, so I was thinking about spreading it out as such - a 50K Director's Loan to be payable within 12 months (repeating for year 2 and 3). In your experience, would something like this be a red flag for Home Office?

Thanks!

[CR001]

Do you not have the full £200k available to yourself?

It sounds like you want to invest £50k, have this paid back and then invest the same £50k paid back again and again

[zimba]

You must have access to 200K if you want to invest using your own money.

a 50K Director's Loan to be payable within 12 months (repeating for year 2 and 3). In your experience, would something like this be a red flag for Home Office?

Recycling money to give the impression that you had access to 200K. That is called fraud my friend

[AdamR]

I have access to the full 200K, more than that actually, but was wanting to put some money down and purchase a home when I arrive. The business doesn't need an influx of cash to grow, so I was looking for ways to meet the visa requirements, but not have everything tied up in it.

[zimba]

I have access to the full 200K, more than that actually, but was wanting to put some money down and purchase a home when I arrive. The business doesn't need an influx of cash to grow, so I was looking for ways to meet the visa requirements, but not have everything tied up in it.

You must invest all 200K in the business without recycling the cash. Even if you give the loan amount back and then reinvest it, your accounts will still show nothing beyond 50K investment. If you get paid dividends or salary and then you invest some of that money back assuming that it does NOT come from your investment and comes from company revenue, then you might have a way.

[AdamR]

Thanks for the quick reply and perspective Zimba, it's really appreciated.

I guess the alternative would be to do a Director's Loan for the full amount and have it paid back in something like two years. Rent for two, see how the market reacts to Brexit, then buy.

[AdamR]

Actually I read that wrong and a bit hastily. If I'm understanding what you're saying Zimba, at the end of the initial three years the balance sheet has to show the business owing me 200K as a Creditor in order to get the points for extension. Your potential solution was starting with a smaller initial investment, and then increasing the amount invested in the company through earnings from revenue, until I'd reach the full requirement.

[samaygrg]

Actually I read that wrong and a bit hastily. If I'm understanding what you're saying Zimba, at the end of the initial three years the balance sheet has to show the business owing me 200K as a Creditor in order to get the points for extension. Your potential solution was starting with a smaller initial investment, and then increasing the amount invested in the company through earnings from revenue, until I'd reach the full requirement.

Just few thoughts ...
Most of we directors are either not having any salaries from business or having very less.. just to make sure our story 'that we haven't recycled the invested money in whatsoever circumstances' is well told to UKVI, as their key issue of the GET is money recycling. So try to build that story in there in your way, as we all have got our own different ways and guidance hasn't specifically said anything in this regards.

And yeah at the end of 3rd year, your B/S got to show that you have invested £200K to your business [Guidance has said this].

[AdamR]

Thanks Samaygrg.

I'll have to do some more digging around online. I'd be joining a business with 4 other equal partners. Right now they make a decent salary and the biz is thriving. Which makes for a good opportunity, but a bit tricky with a Visa.

Cheers

[samaygrg]

Thanks Samaygrg.

I'll have to do some more digging around online. I'd be joining a business with 4 other equal partners. Right now they make a decent salary and the biz is thriving. Which makes for a good opportunity, but a bit tricky with a Visa.

Cheers

Yes dear. It is very tricky indeed. We all are trying to tailor all the things very carefully but still not sure about the outcome.