Board Resolution For Loan To Director Template for England and Wales

When a company lends money to one of its directors, or a director lends money to the company, the board needs a clean record that it approved the arrangement properly. A Board Resolution for Director Loan documents that the directors who could vote did authorise the loan, on what terms, and how the conflict of interest was handled. For a company in England & Wales with no in-house lawyer, it is the document that protects the business commercially and keeps the transaction compliant with the Companies Act 2006.

What is a board resolution for a loan from a director?

A loan from a director is where a director puts their own money into the company, often as working capital or to finance a project. The board resolution records the amount, the interest rate (if any), the repayment terms and whether the loan is secured. Because the director is on both sides of the arrangement, the resolution also minutes the director's declaration of interest and confirms that the remaining directors approved the terms. A director's loan to the company is usually simpler to approve than a loan the other way, but the paperwork still matters: it fixes the terms, evidences the agreement, and sets out how and when the company will repay. Where the amounts are larger or the arrangement runs over a longer period, the board often pairs the resolution with a full loan agreement setting out the term loan in detail.

What is a board resolution for a loan to a director?

A loan to a director is where the company extends finance to a director, for example bridge financing on a property purchase or short-term personal funding. This direction is the more heavily regulated one. Sections 197-214 of the Companies Act 2006 require shareholder approval for many loans to directors, and the board must set terms a third party would accept, establish a repayment schedule, and consider any security. The resolution should show the loan serves a legitimate purpose and that the borrowing director took no part in the vote.

When do you need this document?

You need this resolution whenever money moves between the company and a director as a loan. Common situations include a director injecting cash to meet payroll or fund a project, a director needing bridge finance ahead of completing a transaction, restructuring an existing director's loan account, or changing the repayment terms on a loan already in place. Documenting the decision at the point it is made means the board has evidence of authorisation on file rather than reconstructing it later.

How does the board approve a director loan?

The approval process follows a few clear steps:

1. The director with the interest declares the nature and extent of that interest to the other directors before the loan is agreed, under Section 177.
2. The disinterested directors consider whether the terms are reasonable and whether shareholder approval is also needed.
3. Those directors vote, with the interested director excluded from the count where the articles require it.
4. The resolution records the decision, the terms and the date, and is signed and kept with the company's records.

Where shareholder approval is required, the board resolution usually sits alongside a shareholder resolution authorising the same transaction.

What terms should the resolution record?

A complete resolution names the director, states the loan amount, the interest rate, the repayment schedule, and any security. It confirms the business purpose, records the conflict of interest and how it was managed, and references the shareholder approval where that applies. Keeping these details precise now avoids disagreement about the terms later. For related corporate records, you can also use GenieAI's wider set of board resolution templates to minute other decisions consistently.

What are the tax points to be aware of?

Loans to directors have tax consequences the board should note when it approves them. A beneficial loan above the HMRC threshold is a taxable benefit in kind, and a loan from a close company to a director-shareholder that is still outstanding nine months after the accounting period end attracts a Section 455 charge of 33.75%. The resolution does not decide the tax, but recording the terms accurately gives the people filing the company's returns the facts they need.

Drafting and reviewing with GenieAI

You can draft this resolution for free with GenieAI, then have the terms reviewed against your company's own articles and approval rules before anyone signs. Genie checks the amount, interest rate and repayment schedule for consistency, flags where a shareholder resolution or a separate loan agreement is also needed, and keeps the whole record ready to sign. The practice of documenting each director loan the same way, every time, gives the board a reliable paper trail across the year.