shareholder loan


A loan made to a company from an individual shareholder or partnership that exchanges money for interest payments. The loan can be secured by the shares (an equity loan) or through a debenture. This type of loan ranks below commercial loans if it is not secured by collateral, making it subordinated debt. A shareholder loan is often associated with S Corporations.

Use shareholder loan in a sentence

You may want to try and take on a shareholder loan if you think that will be the best way to proceed.

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The chairmen of the board gave the Fortune 500 a shareholder loan to make up for low quarterly earnings in exchange for a larger stake in the company.

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To avoid Internal Revenue Service scrutiny any shareholder loan granted will have a minimum interest rate greater than or equal to its Applicable Federal Rates.

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