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SMSF can it be used to secure a loan?

Discussion in 'Superannuation, SMSF & Personal Insurance' started by shrek, 6th Mar, 2011.

  1. shrek

    shrek Member

    Joined:
    21st Jun, 2009
    Posts:
    13
    Location:
    Brisbane
    Hi Team

    Late last year I got my SMSF up and running thanks to all on here and the advice, I locked 90% of it on a Term Deposit @7% (170k) for 9 months and between my wife and I will commit approx 48k per year to the fund. Our goal is to keep doing this for 18 months and then move into property (as the fund will have approx 300k balance by then). We also set up insurances in the fund, TPD (paid personally), LIFE and Salary Protection from the fund.

    My question is that I have recently come across a business I would like to buy and it is a Gym, $349k but term of lease. While I know the SMSF cannot buy the business as apart for the business assets there is no "real property" can my SMSF be used a security for a business loan to buy the business? Or can the SMSF buy the assets of the business and then Bank loan the rest?

    Just Ideas at this stage, I prefer to borrow the money and if I can use the SMSF as security for the loan.........is this possible?

    Cheers

    SHREK!
     
  2. SMSFMAN

    SMSFMAN SMSF Specialist Advisor™

    Joined:
    11th May, 2009
    Posts:
    8
    Location:
    Castle Hill, NSW
    No you are not allowed to put a charge over a SMSF asset in the circumstances you have outlined. If your business went under then your SMSF would be called upon to meet your business debts which is a no no!

    This would be a breach of a number of rules.