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#211: Business Loans - From Setup to Repayment

Season #1

In this episode, Joshua Escalante Troesh CFP® and Amelie Riendl AFC® break down how to properly structure, document, and repay owner-funded business loans—from deciding whether the money should be treated as a loan or a capital contribution, to understanding tax, legal, and bookkeeping implications. The conversation highlights why documentation matters, when to involve an attorney, and how repayment mechanics work.

Top takeaways:

  • Many new businesses start with capital contributions, not loans, which add unnecessary complexity early on.
  • The first (and most important) step is deciding whether the money should be a loan or a capital contribution, as each has different tax and legal consequences.
  • Proper documentation protects you in audits and lawsuits; even loans to yourself could benefit from having a signed agreement outlining the key terms of the loan. 
  • Loan payments must be split between principal and interest, and interest must be reported as income to the owner.
  • Proper bookkeeping may benefit from hiring professional services to help.  
  • If repayment terms need flexibility, an attorney should draft provisions that a reasonable third party would accept.
  • Poorly documented loans can jeopardize liability protection and may require costly retroactive bookkeeping and tax corrections.

With thoughtful planning and proper documentation, owner loans can support your business without creating future financial or legal headaches.

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