Shareholder Loan Agreement Template: What To Include

Mina and Jo run a small SaaS startup in Wellington. Cash is tight, but a new customer contract is close, so Mina transfers $30,000 from her savings into the company account to cover product development and salaries for the next few months.

Everyone trusts each other, so it feels tempting to leave it as a casual founder contribution and sort it out later. But six months down the track, questions start popping up. Was it a loan? Was Mina meant to get more shares? Can the company repay her before paying other bills?

This is exactly where a clear shareholder loan agreement helps. It records the money as debt, not equity, wages or an informal advance, and gives your startup a clean paper trail from day one.

What Is A Shareholder Loan Agreement?

A shareholder loan agreement is a contract that records money lent by a shareholder to your company, including when and how the company will pay it back.

In New Zealand startups, this often comes up when a founder puts in cash to help with early costs, product development, stock, marketing or working capital. The company might not be ready for an investor round, or you may not want to issue more shares just because one shareholder has cash available.

A written agreement helps make the arrangement clear for:

• The shareholder lending the money, because they know when repayment is due and whether interest applies.
• The company, because it can record the amount as a liability in its accounts.
• Other shareholders, because the loan doesn't quietly change ownership percentages.
• Future investors or lenders, because they can see what the company owes and on what terms.

If you're searching for a shareholder loan agreement template in NZ, the main thing to remember is that the template shouldn't just say money was paid.

It should explain the full deal: amount, purpose, interest, repayment timing, default, approvals and what happens if the company raises money or runs into cash flow trouble.

Templates often miss the commercial details that matter most, so a lawyer should tailor the document before you use it.

Is A Shareholder Loan Different From Shares, Wages Or An Advance?

Yes, a shareholder loan is different from shares, wages and informal advances because it creates a debt the company is expected to repay.

This distinction really matters. If your paperwork is unclear, the same payment can be described differently by different people later. That can lead to awkward conversations between founders, messy accounting records and problems when you try to raise capital.

Loan Vs Shares

A loan doesn't usually give the lender extra ownership in the company. If Mina lends $30,000 to the company, she doesn't automatically get more shares or more voting rights. She has a right to repayment under the loan terms.

If you want the money to increase the lender's ownership, that's a share issue, not a loan. That usually means updating the share register, recording the issue properly under the Companies Act 1993 and making sure your shareholders agreement allows it.

Loan Vs Wages

Founder wages are payment for work. A shareholder loan is funding provided to the company. If you're paying yourself for services, you'll need to think about employment or contractor arrangements, PAYE, tax and payroll records. If you're lending money, you need loan records.

Loan Vs Informal Advance

An informal advance is often just a transfer with a vague note like working capital. That might be fine for a few days, but it's not a great long-term record.

For example, Mina's $30,000 loan could be documented as interest-free, with repayments of $2,500 per month starting six months after signing. That makes it clear the company owes a fixed debt, rather than Mina receiving extra equity or back pay.

What Should A Shareholder Loan Agreement Template Include?

A good shareholder loan agreement template should include the commercial terms, the approval process and the consequences if the company can't repay on time.

Here is a practical fill-in outline you can use as a starting point. This isn't a finished legal document, and a lawyer should tailor it to your company, shareholders agreement and funding plans.

1. Parties - Write the company's legal name, NZBN if it has one, Companies Office number and the shareholder's full legal name.
2. Background - Briefly explain why the loan is being made, such as working capital, inventory, software development or startup costs.
3. Loan Amount - State the exact amount being lent and whether it will be advanced in one payment or instalments.
4. Drawdown Date - Record when the money must be transferred and to which company bank account.
5. Interest - Say whether interest applies, the rate, when it accrues and when it's payable. Ask your accountant about tax treatment.
6. Repayment - Set out repayment dates, instalments, a repayment holiday or payment on demand if that's agreed.
7. Early Repayment - Say whether the company can repay early without penalty.
8. Subordination - Record whether the shareholder's loan ranks behind bank debt, investor debt or other creditors.
9. Security - State whether the loan is unsecured or secured by a security agreement over company assets. If security is involved, PPSR registration may be needed.
10. Company Approvals - Include board approval, shareholder approval if needed and any process required by your constitution or shareholders agreement.
11. Default - List what counts as default, such as missed repayments, insolvency events or breach of the agreement.
12. Conversion Rights - If the loan can convert into shares later, explain the trigger, valuation method and share issue process.
13. Records And Notices - Say how notices are given and where the company will keep signed records.

A company loan agreement template for a startup should also line up with your cap table. The loan shouldn't accidentally promise shares unless that's what you intend.

How Do You Record A Shareholder Loan To A Company In NZ?

You record a shareholder loan to a company in NZ by documenting the agreement, approving it properly and making sure the accounting records match the legal terms.

The Companies Act 1993 requires companies to keep proper accounting records. For a shareholder loan, that usually means the company should be able to show the amount borrowed, the date received, repayments made, interest if any, and the current balance.

A sensible process looks like this:

1. Check Your Existing Documents - Review your constitution and shareholders agreement to see whether founder loans, related-party transactions or new funding need special approval.
2. Agree The Terms - Decide the loan amount, interest, repayment timing, security and whether the loan can convert into shares.
3. Prepare The Agreement - Use a tailored loan agreement for the startup, rather than relying on a short email or bank transfer description.
4. Approve The Loan - Record board approval in writing. If your shareholders agreement requires shareholder consent, get that too.
5. Transfer The Money Clearly - Use the company bank account and a clear payment reference, such as shareholder loan from Mina.
6. Update The Accounts - Ask your accountant to record the amount as a loan payable, not income or share capital.
7. Keep A Repayment Record - Track every repayment and interest payment so the balance is always clear.

You normally don't register a basic unsecured shareholder loan with the Companies Office. The company should still keep the signed agreement, board minutes and accounting records safely with its company records.

If the loan is secured over company assets, you may need a secured loan agreement and registration on the Personal Property Securities Register. That's a different step from simply signing the loan agreement, so get tailored advice before treating the loan as secured.

What If The Lender Is Also A Director?

You can use a director loan agreement in NZ when the lender is also a director, but you need to be extra careful about approvals, conflicts and director duties.

Many startup shareholders are also directors, so this situation is common. The key issue is that the same person may be wearing two hats: lender and company decision-maker.

Under the Companies Act 1993, directors need to act in good faith and in the best interests of the company. They also need to think carefully about the company's financial position before agreeing to repayment terms the company may not be able to meet.

Practical steps include:

• Declare The Interest - The director who is lending money should disclose their interest in the transaction.
• Record The Decision - Keep board minutes showing why the company is borrowing and why the terms are fair for the company.
• Check Your Constitution - Your constitution may set rules about interested directors voting on related-party transactions.
• Keep Other Shareholders Informed - If there are other founders or investors, make sure they understand the loan doesn't change the share split unless conversion is agreed.
• Be Careful With Repayments - If the company is under financial stress, paying a director or shareholder back ahead of other creditors can create real risk.

A director loan is often perfectly fine when it's transparent, approved and recorded properly. Problems usually arise when the company treats the director's money casually, then later tries to explain whether it was a loan, unpaid salary, reimbursed expenses or an equity contribution.

How Much Does A Startup Loan Agreement Cost?

It depends on the complexity of the loan, how many shareholders are involved and whether the loan needs special features like security or conversion into shares.

There are a few common ways to handle the document.

Free Template

A free template can help you understand the usual structure, but it may not fit your startup. It might miss New Zealand-specific points, your shareholders agreement, company approval requirements or tax and accounting issues.

This can be risky if the loan is large, there are multiple founders, or you plan to raise investment soon. Investors often look closely at founder loans because they affect the company's balance sheet and future cash flow.

Online Fixed-Fee Legal Help

An online fixed-fee service can be a good middle ground if you want the document tailored without open-ended hourly billing. The work should cover the loan agreement review, key drafting choices, and any related approvals or signing steps.

You should be quoted a fixed fee up front before you decide whether to go ahead.

Traditional Hourly Billing

A traditional hourly billing option may suit more complex financing, especially if there are external investors, secured lending, multiple entities or negotiation between several parties.

Whichever option you choose, the cost should reflect more than the document length. The real value is making sure the loan fits your company records, cap table, accounting treatment and future funding plans.

Key Takeaways

• A shareholder loan agreement records founder funding as debt, not shares, wages or a loose advance.
• Your agreement should cover the loan amount, interest, repayment timing, security, default and approval process.
• If the shareholder is also a director, document conflicts, board approval and the company's reasons for accepting the loan.
• Keep the agreement, board minutes and accounting records aligned so the loan is clear to founders, accountants and future investors.
• A template can be a useful starting point, but it should be tailored to your company, shareholders agreement and funding plans.

If you'd like help with your shareholder loan agreement, founder funding records, company approvals or startup financing documents, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.