Pension Led Business Finance is a way you can use your existing pension pot (either a SIPP or a scheme from a previous employer) to make loans to your business. If used correctly it means you can both get a cheap, flexible loan for your business and your pension earns a competitive return.
- If you have an existing pension you can arrange to lend up to 70% of it to your business
- The loan must be secured on an asset but for established businesses Intellectual Property is the most commonly used asset
- The loan term can be up to 10 years and must be at a commercial rate (e.g. 6%)
- Your business gets a cheap loan and your pension makes a healthy return
- Arranging Pension Led Business Finance is understandably very regulated to it takes 6-8 weeks to complete
How does Pension Led Business Finance work?
If you are a Director of your own business looking for funds but also have a private pension, either from a previous employment or a SIPP, then Pension Led Business Finance enables you set up a company pension scheme, transfer some/all of the funds from your existing scheme in and then as the Trustee of that pension you can decide to make a loan to your own business.
The loan can either be secured with a first charge on an asset (Intellectual Property is allowable as security and a popular choice) or the pension fund can purchase an asset from the business and lease it back to them. Depending on which structure is used a max of 50-70% of the pot may be available for finance.
Pension Led Business Finance is regulated and fully compliant with HMRC and The Pensions Regulator. You will be required to take financial advice as part of the process to ensure this is the right option for you.
To discuss it further please either call us on 01494 410 125 or complete the form opposite and we will call you.
Are you looking for Pension Led Business Finance?
Just complete a few simple questions below and we'll be in touch soon to get things moving.
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What is needed to apply
Applying for a Pension Led Business Finance is very easy. Below are listed the things you need in order to apply.
- Eligibility Criteria You must be a Director or your own business. You must have a pension pot with a transfer value of at least £80,000. Your credit history or proof of income is not relevant.
- Documents Required Initially no documents other than proof of your pension are required.
- Additional Comments This process takes 6-8 weeks to complete as it is a highly regulated transaction. There are also fees involved and these depend on the size of the pension pot.
- Does the loan from my SIPP/SSAS have to be secured?
Yes, but if you have no physical assets it can be secured on Intellectual Property.
- What is the Intellectual Property in my business?
This can be patents, logos, trademarks, databases, designs, copyrights etc.
- How do I value the Intellectual Property in my business?
This will be done for you by professional valuers.
- Can I give my business an interest-free loan?
No, HMRC rules on these loans specify it has to be at a 'commercial rate'; typically 6% is used but the higher the interest rate, the greater the return to your pension.
- How much does it cost?
There is no cost to explore if this is suitable for your business. If it transpires it is not then you will not be required to pay anything. Should you choose to progress the cost depends on the value of your pension fund but typically so set this up costs £5,000-£10,000.
- How long does this take to arrange?
Approx 4-8 weeks depending on how quickly you can respond to queries.
To learn more or to apply for a Pension Led Business Fiannce please either ﬁll in the call back form at the top of this page or call us on 01494 410 125 and we'll walk you through your options at no cost or obligation.