It should be used anytime a shareholder lends money to your company.
Founders sometimes lend money to the company at the outset to pay for initial startup costs. This should be documented with a shareholder loan agreement.
It provides documentation that money deposited with the company was intended as a loan and not revenue. The money can therefore be withdrawn as a repayment, rather than as taxable income for the shareholder.
Loan Terms: The loan can be low interest and repayable on demand.