Shareholder loan is a debt-like form of financing provided by shareholders. Usually, it is the most junior debt in the company's debt portfolio, and since this loan belongs to shareholders it should be treated as equity. Maturity of shareholder loans is long with low or deferred interest payments. Sometimes, shareholder loan is confused with a loan from company to shareholders.

Contents 1 Applications 2 See also 3 References 4 External links

[edit] Applications

• This form of financing is quite common while funding young companies with positive cash flows because such firms are still not able to raise debt from banks but need debt anyway to create a tax shield.
• The contribution of shareholder loans to a corporation's capital structure generally relieves the corporation's debt load and is therefore used in LBOs to manage a degree of leverage.
• Shareholders can extend the loan in distressed or near-default situations to save the company.^[1]

[edit] See also

• Hybrid security
• Seniority (finance)
• Venture lending

[edit] References

[edit] External links

• S Shareholder Loans: Potential Tax Trap
• Tax aspects of contributions to capital of shareholder loans

v • d • e Corporate finance and investment banking Capital structure Senior secured debt · Senior debt · Second lien debt · Subordinated debt · Mezzanine debt · Convertible debt · Exchangeable debt · Preferred equity · Shareholder loan · Common equity · Pari passu Transactions (terms / conditions) Equity offerings Initial public offering (IPO) · Secondary Market Offering (SEO) · Follow-on offering · Greenshoe (Reverse) · Book building Mergers and acquisitions Takeover · Reverse takeover · Tender offer · Poison pill · Freeze-out merger · Tag-along right · Drag-along right · Control premium · Divestment · Demerger Leverage Leveraged buyout · Leveraged recap · Financial sponsor · Private equity · Bond offering · High-yield debt · DIP financing Valuation Financial modeling · Business valuation · stock valuation · APV · DCF · Net present value (NPV) · Cost of capital (Weighted average) · Comparable company analysis · Enterprise value · Tax shield · Minority interest · EVA · MVA · Terminal value · Real options analysis List of investment banks · List of finance topics