Foreign Perspectives

Or rather, it SHOULD be a commercial loan.

The problem is that for it to be a commercial loan rather than a personal mortgage, the business would have needed to be created no later than the day that I signed to buy the place. After all, if the business didn’t exist before then, it wouldn’t be possible to make the loan to it, would it?

Seems obvious, doesn’t it?

Unfortunately, it wasn’t obvious to either our former accountants nor the bank. Net effect being that the accountants didn’t register the business ’til about two months after we’d bought the hotel and therefore the loan is a personal one and we can’t count the loan repayments as business expenses.

Actually, we can but only if I rent the hotel to the business so I’ve started billing myself rent each month.

This is a bit of a nuisance as I need to write out a cheque from the business account, deposit that, wait a week for it to clear then write out a cheque to the business account. So, I thought I’d ask the bank if we could set up a standing order to the personal account and move the direct debit for the loan to the personal account.

As it’s France, that requires a meeting with our counsellor so three weeks went by as I was off in the UK and he was on holiday.

Nope. He won’t do it. He insists that it’s a commercial loan and that can’t be paid from a personal account. The only way he’ll do that is if I set up a company to run the hotel and do it that way. Unfortunately, that’s rather expensive and besides it won’t work so I’ll just have to continue with the cheques each month.

Of course, the reason that he insists it’s a commercial loan is that, if it is a personal loan (and it is) then he and everyone in the bank associated with granting it will be suspended from work by the Banque de France for providing an illegal personal loan. So, for once, we understand his reasons (even if he won’t state them).

So, if you are getting a loan to buy a business here, make sure that your accountant has actually set up the company before the day you sign to accept the loan.