Raising capital for business
A pension scheme isn’t just a vehicle to save for a comfortable retirement, for business owners a Small Self-Administered Scheme (SSAS) can provide massive value long before drawing an income.
More Ways to Invest With SSAS
Along with investing in standard investment options such as funds, stocks & shares and deposit accounts, a SSAS can hold assets such as directly-held real estate, loans to businesses and shares in private companies. This is helpful to business owners as they can invest in their own companies and use the capital to grow them at the same time as growing their business – a virtuous circle. Examples include:
1. Lending money to a business
A SSAS can lend up to 100% of its value to a business, the amount of the loan being dependent upon whether the business is deemed to be a connected party, the rules for which are complex and often misunderstood. The proceeds of the loan can be used for any legitimate business purposes and the interest rates are very low when compared to borrowing from banks and other commercial lenders.
2. Purchase of private company shares
SSAS pensions can invest in private company shares, including its sponsoring employer, subject to certain prescribed limits. Where a company issues shares and a SSAS purchases them, the Company receives a cash injection from the proceeds of the share subscription for it to invest in the growth of the business.
3. Purchase of assets
Where a company has assets in the balance sheet, property for example, these can be sold to a SSAS. The advantage of this is that the Company receives the proceeds of the sale which can then be deployed into the business to finance growth, repay existing debt, etc.
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