SMSF Loans

Obtaining finance through a SMSF is a good way to purchase assets. It is, though, complex but Orion Financial can help you through the maze.

Unlike a personal or business loan there are specific laws restricting the use of SMSFs to borrow money. Laws that also restrict the recourse a lender has in the event that the trust cannot meet its repayment obligations.

A basic outline of the rules that Orion Financial can help you navigate are as follows:

• The asset is an asset the SMSF could otherwise legally acquire (if it had the funds).
• The asset is held on trust for the SMSF using a security trust (known as a security custodian).
• The SMSF acquires a beneficial interest in the asset from the outset.
• The SMSF has the right to acquire legal title from the security trustee upon making all loan repayments.
• The lender must only have limited recourse against one particular asset. This means that in the event of a loan default, the lender must not be able to claim any other assets of the fund.

Each borrowing arrangement can only be for a “single acquirable asset”. In the case of strata title or subdivisions, each title is considered a separate asset.