Shareholder loans

Loans made by shareholders to a company. They are a form of shareholder financing distinct from an equity investment; their legal and tax treatment depends on the terms and applicable rules.

Shareholder loans in round numbers

Hypothetical, US$ millions: a shareholder provides 10 of financing to a company, consisting of 3 of equity and 7 of shareholder loans. The total financing is 10, but the equity investment is 3. No interest rate, security, or repayment terms are assumed.

First & second lien · PIK interest · Structural vs contractual subordination · SPV / holdco · Recharacterization · Intercompany loan · All of the glossary