Financing an SCI Purchase: Company or Shareholders?

Financing an SCI purchase: should the company or the shareholders borrow?

When an SCI (société civile immobilière) buys a property, the money can come from three places: the members' capital, a loan taken by the company, or loans the members take personally and put in. The choice is not just administrative - it decides where the debt sits, how the loan interest is deducted for tax, what security the bank takes, and even what a future sale of the property will cost in duty. This guide sets out the three routes, compares a company loan with the members borrowing personally, explains the security a lender will require and the guarantee trap to avoid, and shows how the financing chosen at the outset shapes the exit years later.

The decision matters because the routes are not interchangeable. A loan taken by the SCI is a company debt whose interest is deducted against the rental income or the corporation-tax base; a loan taken by a member to fund their share is deducted differently and does not sit on the company's balance sheet at all. The security a bank wants - a mortgage, and often personal guarantees - raises its own questions, particularly where the property is let to a company the members also own. And the way the purchase is funded feeds directly into the tax on a later sale. Settling the financing structure deliberately, rather than defaulting to whatever the bank proposes, is what keeps all of this under control.

Three ways to finance the purchase

The first route is the members' capital. The acquisition of the building can be financed by the capital contributions the members make, and there is no minimum capital imposed, though a capital matching the investment is often recommended. That capital can be paid up progressively - in step with the instalments of any loan the company takes - provided the articles set out the terms of the paying-up and the manager's powers to call it. Funding the purchase from capital keeps the structure simple, but it requires the members to have the money available, which is often not the case for a large property.

The second route is a loan taken by the company. The SCI can borrow to finance the acquisition, and the loan is then a company debt. This is the common route for a property investment funded on credit: the company borrows, the bank secures the loan on the property, and the loan is serviced from the rents. Because the debt belongs to the company, it reduces the value of the shares on a transfer or a transmission, which itself has planning consequences.

The third route is the members borrowing personally. The members can each borrow the sum needed and pay it into the company, either as a contribution or to pay up a contribution: each member makes a cash contribution at least equal to the sum they have borrowed, the loan serving to pay up that contribution. The key difference from a company loan is that this personal debt does not sit on the company's balance sheet - it is the member's own borrowing to fund their stake, not a debt of the SCI. That distinction drives both the tax treatment of the interest and the value of the shares, and it is the heart of the company-versus-shareholder choice examined next.

Company borrows or shareholders borrow: the debt and the interest

The choice between the SCI borrowing and the members borrowing turns on two linked consequences: where the debt sits, and how the interest is deducted. Where the company borrows, the loan is a company debt (a dette sociale). Its interest is deductible - from the property income (revenus fonciers) shared between the members where the SCI is not subject to corporation tax, or from the corporation-tax base where the SCI has opted for that regime. And because the debt is the company's, the value of the shares on a sale or transmission is determined after deducting what the company still owes the bank - so a company loan mechanically lowers the taxable value of the shares while it is outstanding.

Where the members borrow personally to fund their stake, the debt is theirs, not the company's, and does not reduce the company's balance sheet in the same way. The tax treatment of the interest then follows a different route: for an SCI not subject to corporation tax, the members can deduct the interest on the loans they have contracted personally to acquire or subscribe their shares from their share of the company's profits (the deduction is set out in the tax doctrine and examined in our guide to deducting loan interest in an SCI). So both routes can ultimately give an interest deduction where the SCI is at income tax, but by different mechanisms - the company loan against the rental income at the company's level, the personal loan against the member's share of profits at the member's level.

Which is preferable depends on the situation. A company loan is the natural route for an investment SCI at income tax that lets the property: the interest reduces the rental income directly, the bank secures the loan on the building, and the outstanding debt keeps the share value down. Members borrowing personally can suit a family arrangement - for example where parents fund a purchase for the benefit of children - or where the members prefer to keep the borrowing on their own balance sheets. The corporation-tax option changes the picture again, because there the company's interest is deducted against the IS base rather than rental income, which interacts with the depreciation and the eventual gain in ways that need modelling. The right answer is a tax and structuring question, not a default.

Who should borrow - the SCI or the shareholders?

The right route depends on the SCI's regime and purpose. Pick your situation - the check shows what to weigh.

The security the bank will take

Whichever route funds the purchase, a lender will want security, and its form raises questions of its own. Where the company borrows, the lender will require a mortgage (hypothèque) over the property acquired, and the bank may also demand guarantees from the members - and in particular from the principal member behind the arrangement. Where the members borrow personally and pay the money in, the bank will typically require a mortgage guarantee from the SCI to secure the members' loans, which brings the company's own interest into play.

That is where the main trap lies. A guarantee given by the SCI must, in principle, relate directly or indirectly to the company's object: the company must have an interest in guaranteeing the debt, and the security must not risk compromising the company's survival. Where it does, the guarantee is necessarily contrary to the company's interest, even if it falls within the statutory object (Cass. com., 6 January 2021, no. 19-15299). A mortgage-guarantee deed signed by all the members in principle binds the company (Cass. civ., 3e ch., 25 September 2002, no. 00-22362), but that does not cure a guarantee that is contrary to the company's interest. So a guarantee by the SCI of another's borrowing cannot be given lightly - it has to be justified by the company's own interest and must not endanger it.

The situation is most delicate where the SCI's property is let to a trading company that the members also control. If the bank asks that trading company to guarantee the SCI's loan, the operation risks being annulled under the prohibition on a company director having their commitments towards third parties guaranteed by the company (C. com. Arts. L. 223-21 and L. 225-41). And while a community of interest between the SCI and a related company can validate a guarantee - for instance where the same couple own both companies and the SCI draws its income from letting to the other - that same community of interest can be used by the trading company's creditors to argue a confusion of the two estates (confusion de patrimoines), which is one of the things holding property in a separate SCI is meant to prevent. Guarantees between a family's SCI and its trading company therefore need to be structured with care, not signed as the bank presents them.

The bank wants security - what is involved?

The security a lender takes has legal consequences worth checking. Pick the point you want to understand - the check explains it.

The downstream effect: financing shapes the exit

A less obvious reason to plan the financing is that it shapes what a future sale of the property costs. Where the purchase was funded by low capital plus current-account advances from the members, or by a company loan repaid out of rents, the capital shown on the balance sheet will generally be small. When the property is later sold by an income-tax SCI and the proceeds are distributed, that distribution is treated not as a partition of the company but as a repayment of the members' current accounts - and so escapes the partition duty. Where, by contrast, the capital is high, distributing the sale proceeds in a way that does not correspond to an allocation of profit gives rise to the partition duty at 2.5% (CGI Art. 746) on the assets partitioned. Financing a purchase through modest capital and current-account advances rather than a large fixed capital can therefore save a real duty at the exit.

Two boundaries keep this in proportion. First, the level of capital has no effect on the capital gain calculated on a transfer of the shares themselves - that gain is worked out on the price against the acquisition value of the shares, regardless of how the purchase was financed. Second, the current-account route is a matter of getting the documentation right, because a member's advance is a loan to the company that the member can in principle call back, and the interaction with the share value and the eventual distribution has to be handled properly; our guide to shareholder loan accounts in an SCI examines this in detail. The point for the financing decision is simply that a structure built on modest capital and members' advances is usually more flexible, and cheaper to unwind, than one built on a large fixed capital.

Financing an SCI purchase - the routes at a glance

Frequently asked questions about financing an SCI purchase

This article is for general information only and states French law and tax rules as published in the sources available at the date shown above, including the partition-duty rate current for 2026. It does not constitute legal or tax advice. The right financing structure for an SCI depends on its regime, its purpose and the transmission plan. Always seek qualified legal and tax advice before financing a purchase through an SCI.