Can my SEIS or EIS investor loan money to my company?
In principle this would be allowable but there are a number of pitfalls that you will want to avoid:
- The EIS investment and the loan must be completely de-linked and not dependent on each other in any way. You will want to have a loan agreement drafted which makes this point clear to all parties involved.
- The loan agreement must be on normal commercial terms, with repayment terms akin to what a normal lender (or a bank) would currently provide you with.
- The loan cannot be converted to an EIS investment at a later date.
- The EIS funds cannot be used to repay the loan balance.
You will want to disclose this on the advance assurance application (if applicable). I would also advise that the loan funds and the EIS funds are paid into separate company bank accounts to show a complete separation and to help you validate how each is being spent (if later questioned by HMRC).