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For many business owners, securing funding for expansion or reinvestment can be a challenge. Traditional business loans often come with high-interest rates and restrictive terms, and giving away equity in your company can dilute your control. However, there is an alternative that provides business owners with greater flexibility and financial control, the SSAS Loan-Back Facility.
In this blog, we’ll explain what the SSAS loan-back facility is, how it works, and the benefits it offers business owners looking to fund growth, purchase property, or meet other business needs in a tax-efficient manner.
A Small Self-Administered Scheme (SSAS) is a pension scheme specifically designed for company directors and business owners. One of its most powerful features is the loan-back facility, which allows business owners to borrow up to 50% of the value of the SSAS to reinvest in their business.
This means that if your SSAS has a fund value of £100,000, you could borrow up to £50,000 back to fund business activities. The loan is repaid with interest into the SSAS, increasing the value of your pension while funding the growth of your business.
How it works:
The SSAS loan-back facility provides business owners with a cost-effective way to access funds. Unlike traditional business loans, which often come with high-interest rates and strict repayment terms, the SSAS loan-back facility allows you to borrow money at a lower interest rate and on more flexible terms.
Additionally, the repayments are made back into your SSAS pension, effectively contributing to your retirement savings while providing the funding you need for business expansion. The flexibility of the loan-back facility makes it a unique option for business owners who are looking to retain full control of their business and avoid external debt.
The loan-back facility is a powerful tool for business growth. Whether you’re looking to expand operations, purchase new equipment, or fund a new project, the SSAS loan-back allows you to access capital without the need to rely on external lenders.
For example, if you are a property developer looking to purchase new properties or invest in new development projects, using the SSAS loan-back facility can provide the necessary funds without incurring high-interest debt. The repayment of the loan goes back into the SSAS, boosting your pension pot while supporting your business’s growth.
The SSAS loan-back facility offers a unique tax advantage: the interest on the loan is tax-deductible for the business. This means that the loan repayments reduce the company’s corporation tax liability, providing additional tax savings. This makes the SSAS loan-back facility one of the most tax-efficient ways to fund business growth.
Moreover, the loan repayments, including the interest, are paid back into the SSAS, which is tax-free, allowing your pension fund to grow in a tax-efficient manner. This dual benefit—tax deductions for the business and tax-free growth for the pension—makes the SSAS loan-back facility a powerful tool for both business expansion and retirement planning.
One of the key advantages of the SSAS loan-back facility is that it removes the need for external lenders or investors. Business owners who want to expand their operations or fund projects no longer have to rely on traditional financing options that may come with restrictive terms or high-interest rates.
Furthermore, using the SSAS loan-back facility means you don’t have to give away equity in your business to outside investors. This allows you to retain full control of your business and its direction, while still obtaining the necessary funds to grow.
The SSAS loan-back facility can be used for a wide range of business activities, making it an extremely flexible and valuable tool. Here are some of the most common uses:
Setting up the SSAS loan-back facility requires careful planning and expert advice to ensure compliance with regulations. Here are the basic steps involved:
The SSAS Loan-Back Facility is one of the most powerful tools available for business owners looking to fund growth, reinvest in their companies, and build wealth in a tax-efficient manner. By borrowing from your own pension, you gain access to low-cost, flexible funding while enjoying tax savings for your business and tax-free growth for your retirement savings.
If you’re interested in exploring how the SSAS loan-back facility can work for your business, book a consultation with Retirement Capital today. Our team of experts is here to help you navigate the process and make the most of this powerful pension feature.
