Internal Loans and Subordination
A holding company can provide capital not only as equity. It can also extend loans. This is a crucial tool within a corporate group. But only when executed properly. 14.1 Basic Model – Internal Loan Structure: Private Individual ↓ Holding ↓ Real Estate GmbH The holding has accumu...
Type
Rule
Difficulty
Advanced
Subtopic
Chapter 14
This module is based on chapter 14, “Internal Loans and Subordination”, from “Entrepreneurial Structural Intelligence”. A holding company can provide capital not only as equity. It can also extend loans. This is a crucial tool within a corporate group. But only when executed properly. 14.1 Basic Model – Internal Loan Structure: Private Individual ↓ Holding ↓ Real Estate GmbH The holding has accumulated €300,000. The Real Estate GmbH requires €200,000 in equity. The holding can either: Make a capital increase or Grant a shareholder loan Both are possible. But their impacts differ. 14.2 Difference: Equity vs. Loan Equity Advantages: Strengthens the balance sheet permanently No repayment pressure Disadvantage: Capital is tied up Difficult to retrieve Shareholder Loan Advantages: Flexible repayment Interest can be charged Disadvantage: Increases debt Banks assess it differently Structural decisions are strategic. 14.3 Incorrect Example – No Contract Holding transfers €200,000 to Real Estate GmbH. No loan agre...
From chapter to application
Relevant next steps
This chapter introduces entrepreneurial structure intelligence: control emerges through clear roles, capital paths and proof.
Sketch companies and roles
Mark capital flows
Involve a tax adviser or notary with a concrete structure question