Director loans are part of the company's equity and appear on the liabilities side of the balance sheet.
In concrete terms, director loans (also known as shareholders loans) represent sums advanced to the company by its directors.
Unlike share capital, director loans can be repaid at any time by the company. It is therefore a flexible way of injecting liquidity in a company.
Shareholder loans can also be blocked for a given period of time, making them non-refundable until the end of the blocking period. Blocking is sometimes required by banks when obtaining a loan, in order to guarantee the presence of these funds until the loan is repaid.
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