Among the many different forms, the employer loan has played a special role for some time. The contract for the loan is not concluded between a bank and a consumer, but in the course of a fixed relationship between the employee and the boss. Paying wages acts as a certain security when the employer goes into advance payment and enables the employer to take out a loan.
The employer loan, also known as employee loan, is a loan agreement between two parties that are linked by an employment relationship. The employee benefits above all from comparably low interest rates and the fact that the creditworthiness check is not available. Instead, workers’ wage claims are taken as collateral. This secures the loan amount and, in case of doubt, the installments for paying the loan can even be paid directly from wages. The employer can assert his claims by withholding his wages, whereby various regulations must be observed. The loan is easier for the employee because there is no bureaucracy with the bank. Otherwise, the employer loan is not only a popular means for banks nowadays: SMEs also allow their employees corresponding offers that are secured by wages.
Special features of an employer loan
Of course, the sums for employer loans must be claimed both in operating costs and in taxes. Since 2008, there have been changes in regulations that deal in particular with interest and tax-free allowances. The monetary advantage must also be taken into account. The following points are particularly important for employer loans:
- The average interest rate published by the bank applies to the interest used in the calculation.
- If the amount exceeds the exemption limit of 44 USD per month, the borrower must declare a non-cash benefit in the tax on the employer loan.
- Income from interest at the employer must be reported as corresponding profits in the balance sheet.