Loans Against Bullion and Krugerrands
Can a business borrow against bullion that it owns?
The short answer
A business may be able to borrow against bullion it owns, where the credit provider lends to businesses and accepts that bullion. The lender will need evidence that the entity owns the metal, that the people signing are authorised to borrow and pledge its assets, and the identity and ownership details required for customer due diligence. How the National Credit Act applies depends on the type and size of the business and the agreement.
How business borrowing against bullion works
The principle is the same as for an individual: the entity hands over bullion as security, receives a loan under a written agreement and gets the bullion back once the loan and all charges are settled. The differences lie in proving who the borrower is, that it owns the bullion and that the people acting for it have authority to do so.
What a lender generally needs from a business
- Registration documents for the company, close corporation or trust
- A resolution or other authority approving the loan and the pledge of the bullion
- Identity documents for the directors, members, trustees or authorised signatories
- Details of the beneficial owners, as required for customer due diligence
- Evidence that the entity, not an individual, owns the bullion, such as invoices or asset registers
- Financial information for any credit or affordability assessment
How the National Credit Act may apply
The Act treats credit to juristic persons, such as companies and close corporations, differently from credit to individuals, and some trusts and partnerships are also treated as juristic persons. Depending on thresholds set under the Act relating to the size of the business and of the agreement, some business credit falls outside the Act, while other agreements are covered in full or in part. Ask the credit provider to confirm in writing how the Act applies to the proposed agreement. Knox Precious Metals (Pty) Ltd is a registered credit provider, NCR registration number NCRCP21466.
What depends on Knox policy and what to do next
Whether Knox lends to businesses, which entities it accepts and the documents it requires are matters of Knox's credit and compliance policy. Bring your ID, proof of address (dated within the last 3 months), the bank details for the account the loan should be paid into and for the debit order, and any certificates, invoices or papers for the item. If you are married in community of property, your spouse must consent to the loan. Identity and ownership verification follows Knox's customer due diligence procedures. Individuals need a copy of their ID or passport and proof of residential address dated within the last 3 months (such as a utility bill). Companies need their registration documents, VAT number if registered, and ID and proof of address for directors and shareholders holding more than 25%. Trusts need the letters of authority and trust deed, with ID and proof of address for trustees and beneficiaries. Knox may also ask for an income tax number and, for bullion purchases, a source-of-funds declaration. Before applying, confirm that the entity's founding documents allow it to borrow and pledge assets, and ask the entity's accountant or attorney about the tax and accounting treatment.
How Knox handles this
Ready for the next step?
Speak to the Knox team about your situation. They will confirm current pricing, availability and requirements before you decide.
