{"id":3497,"date":"2018-10-08T10:00:47","date_gmt":"2018-10-08T10:00:47","guid":{"rendered":"http:\/\/my-brains.co.uk\/jackross\/?p=3497"},"modified":"2018-10-01T08:45:37","modified_gmt":"2018-10-01T08:45:37","slug":"using-pension-funds-in-your-business","status":"publish","type":"post","link":"https:\/\/my-brains.co.uk\/jackross\/using-pension-funds-in-your-business\/","title":{"rendered":"Using pension funds in your business"},"content":{"rendered":"

How your pension savings can help finance your business<\/span><\/h2>\n

As traditional loans fall out of favour with increasing numbers of business owners, you may be looking for an alternative route for financing \u2013 and your pension could be the answer.<\/p>\n

Data from the British Business Bank shows that in 2017 the number of small businesses seeking traditional bank loans reached a record low of only 1.7%.<\/p>\n

In contrast, the use of alternative finance has been on the rise, with external equity finance increasing by 79% at the start of 2017, and peer-to-peer lending up by just over 50%.<\/p>\n

Funding your business using your pension pot may be an overlooked option compared to these, but it can be well worth considering if you want more control over the way you finance your business.<\/p>\n

Rather than relying on a traditional lender to buy into your business and provide continued support, using your pension lets you take on the responsibility yourself.<\/p>\n

Pension-led funding<\/span><\/h2>\n

Pension-led funding allows business owners or directors to finance their business using funds from their pension.<\/p>\n

This can usually be done using a self-invested personal pension (SIPP) or a small self-administered scheme (SSAS).<\/p>\n

The flexibility of these types of pension means they can be used to provide funding either as a commercial loan, or by buying intellectual property.<\/p>\n

Unlike pension withdrawals, there is no minimum age requirement for pension-led funding. However, as older savers are likely to have built up more funds in their pension over time, they will potentially have more finance to access.<\/p>\n

In general, it can be suitable for pensions with funds of more than \u00a350,000.<\/p>\n

For business owners with a significant amount of savings in their pension, this could be a profitable and flexible finance option.<\/p>\n

Taking a commercial loan<\/span><\/h2>\n

One option is for your business to take a commercial loan from your pension. This can only be done with a SSAS, and with the approval of the trustee or trustees.<\/p>\n

With this method, the business borrows money from the pension and pays it back with interest.<\/p>\n

Your business can use this money however it chooses, whether that\u2019s for purchasing commercial property, stock or machinery.<\/p>\n

However, the loan must meet the following requirements:<\/p>\n