Bight ideas needed - mixing business cash with personal loans

jm2

A good friend of mine......
Has a personal mortgage of £180K a (personal) business mortgage of £30K and needs to borrow a further £50K. His business (3 partners) is often awash with cash (£300K+) as a very conservative finance director hoards cash to pay the next tax bill and likes to have a "reserve". Of course the revenue does want its money so twice a year the levels in the account fall to a few thousands although they always seem to build back up again very quickly. There is plenty of equity in my friends house and in his share of the business premises.
Interest on the business savings is very low compared to the cost of his personal borrowing. In addition my friend has interest only mortgages and 2 failing endowments unlikely to pay more than £70K in 3 years time. He hopes to retire in 7 years.
My friend had thought that if he could use the business cash to offset mortgage interest then he could get on with paying off the mortgage capital rather than just interest. Nat West run just such a scheme called business offset but only where there are one or two partners involved. His current bank (Lloyds/TSB) do not seem interested.
Anyone got any bright ideas?

Sepa74

He needs to be very careful. If the offset is against the business mortgage it will be fine, but if he tries to do it against his personal mortgage it will be classed as a directors loan and he will have to pay income tax on it.

Business savings rates are VERY low at the moment. I was told my only option was to invest in UK Gilts. It's frustrating.

However tbh, the conservative finance director isn't really that conservative. If the account goes down to just a few '000s twice a year then it sounds to me like it's actually being managed quite well - there isn't much cash sitting around not being used. If it were never to go below the hundreds of thousands then I would agree the director is conservative.