Directors have given loans of over £35,000 to the company. The company's losses are approximately £25,000. The directors want to write off loans to strengthen the balance sheet. Can the loans be written off against losses or converted to shares? Which will be the best way? 

Arthur replies: 

The directors can certainly write off the loans to strengthen the balance sheet. And they can convert the existing director's loan into shares. The write-off will not change the historical fact that the company made losses, and these losses can be used in the future to offset profits (hopefully). But it will have the desired effect on the balance sheet.