Consolidate Business Loan with Personal Loan - UK Business Forums

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Does anyone know why Barclays or NatWest will not give my friend a personal loan to consolidate his business overdraft / loan? Is their a law against loaning someone money for paying off a business loan?

No law as suchbut your pal would have a problem with interest paymets. The directors loan he makes to the company (assuming limited co) will be separate to the original loan. The company cannot claim back th einterest as an overhead unless your pal charges interest to the company for which he will create a taxable income but can't claim relief on hte interest he pays. The question is why would he want to do it that way and why not guarantee the loan himself?

The bank may be a little concerned, lending ?10k for a car means that should things go wrong with him, he can sell the car and at least release some money back to repay. He can't get that money back if it's in hte woring capital of the business.

Source: http://www.ukbusinessforums.co.uk/forums/showthread.php?t=295093

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