A Company can take advantage of the tax relief of making a contribution to its pension, but cushion the cash flow disadvantage with a loan back.

A company can replace expensive overdrafts and other borrowing where the interest is being paid to a third party. This can be replaced with a repayment to its pension where the interest is building the members retirement fund.

A company with funds in a SSAS can be guaranteed available funding when the usual sources have tightened their lending criteria.

This facility is often overlooked, but when used wisely, it can be an effective part of the trustees investment plan – and who is better placed to assess how secure this loan is than them?

Clearly there is a potential risk should the company use this feature and subsequently get into financial difficulty. It shouldn’t be considered in that instance or as a loan of last resort, but for businesses with a healthy financial outlook, this  can be of great benefit.