ERISA-Bubs Posted April 7, 2014 Share Posted April 7, 2014 In a typical mirrored loan, the company will get a loan from the bank and then loan the money to the ESOP pursuant to identical terms. We have a company that would like to get a loan from a bank and then loan the money to the ESOP with more favorable terms. Does this work? Does this provide greater protection, since they are charging the ESOP less? (then again, the ESOP owns 100% of the Company, so maybe it doesn't matter. Link to comment Share on other sites More sharing options...
A Shot in the Dark Posted April 7, 2014 Share Posted April 7, 2014 It is more common place today in ESOP's that that the terms of the inside loan (the loan between the Plan Sponsor and the ESOP) are different that the terms of the outside loan (the loan between the Plan Sponsor and a Financial Institution). Yes, on my occasions, we will see the inside loan have a more favorable interest rate and a longer amortization period than the outside loan. I assume you/or the client have retained a good ERISA attorney with ESOP expertise for the transaction. Link to comment Share on other sites More sharing options...
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