News

Accessing cash

The following article was published by www.gmchamber.co.uk (Greater Manchester Chamber of Commerce)

Q. In this climate it's difficult borrowing money, are there any smart ways I can access cash for my business?

A. Steven Martin, Managing Director, Smart Financial Planning

Yes, one smart way you can do this is to borrow money from your pension fund if you have a pension scheme known as a SSAS (Small Self Administered Scheme). If you do not have one of these schemes, don't worry, your financial planner can set one up for you. The only proviso is that you have a limited company.

The SSAS is allowed to lend half its assets (50% of the net market worth) on a commercial basis. There are some key conditions to the loan. These are;

• It must be secured
• Must not exceed a 5 year term
• Be used for a commercially acceptable reason

There are real benefits to accessing money using your SSAS. These include;

• Benefitting from the interest rate. You are paying interest to yourself! Instead of paying someone else to borrow their money you are paying your own pension scheme. This will usually be at a rate of 1-3% above BoE base.
• Repayment must be through equal instalments, at least on an annual basis. This may mean you may not choose to make any repayments for up to one year.

As with any financial decisions there are risks involved. Your financial adviser will be able to talk you through the risks involved.

For more information about setting up a SSAS or for other financial planning advice, contact us

Steven Martin