DIV 7A Loan Agreements - FAQ's

What is a Div 7A Loan Agreement?

A Div 7A Loan Agreement is a Loan Agreement between a business owner, director or shareholders and their trading entity.

What is a Div 7A Loan Agreement used for?

A Div 7A Loan Agreement allows a business owner, director or shareholder to loan money from their business at a set rate over a defined period.

How do Div 7A Loan Agreements protect my business?

Given the nature of Div 7A Loan Agreements, they have become a focus of attention for the Australian Taxation Office. Formalising your Div 7A Loan Agreement cements the arrangement and complies with ATO requirements.

How can I manage a Div 7A Loan Agreement?

Part of our Div 7A Loan Agreement Package is our Loan Management Dashboard which gives you complete access to your loan agreement on an ongoing basis.

What Reports are Available from my Loan Management Dashboard?

There are several reports available through the Loan Management Dashboard. The most popular is the end of year payments report which outlines all payments made for the period including a principal and interest breakdown. This is especially handy for your accountant and can save hours upon hours of work come tax time.

What Interest Rate can be charged in my Div 7A Loan Agreement?

There is no set rate associated with our Secured Loan Agreements, but it should be noted that part of the Australian Taxation Office requirements is that the interest rate needs to be equivalent to the standard commercial rate.

How long can the Div 7A Loan Agreement period be?

The loan period can be negotiated between the lender and the borrower but is generally set for a defined period less than 7 years. It should be noted that any business loan agreement should be done in consultation with your accountant.  

Can I extend the loan period of the Div 7A Loan Agreement?

Yes, your loan period can be extended through your Loan Management Dashboard, however any loan period extension should be done in conjunction with advice from your accountant.  

Can I Nominate the Div 7A Loan Agreement Repayment Amount?

Yes, the loan repayment amount varies depending on the interest rate, loan period and duration of the loan.

Can I Arrange for Automatic Repayments of my Div 7A Loan Agreement?

Yes, when setting up the loan the borrowers bank details can be included, and an automatic direct debit set up.

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Any Questions?

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With over 35 years’ experience Collection Consultancy Australia prides itself in offering Products and Services designed to Protect Business Assets and Cashflow. Quite often the process can start from simply making business owners aware that there is option available, through to business specific solutions and education. We are here to let business owners know that there can be a better way to secure their financial future.

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