From: Jonathan Bryce 
Subject: Re: Question about providing funding for a Ltd Company
Newsgroups: uk.finance uk.legal
Date: Tue, 11 Nov 2003 18:42:06 +0000

Andrew McGee wrote:

> What's the alternative to a loan in this case?
> 
> Surely the only other way to do it is to have them put the money in as
> share capital; but then there is no interest and no repayment - they only
> get dividends.
> 
> Or have I missed the point?

With a loan, you have a slightly better chance of getting the money back if
the company goes bust.

Also, it is easier to get the capital repaid.  With dividends, you would
have to wait until the company makes profits before you can get the money
back.  With loans, you can get the money back any time, subject to
available funds.