A shareholder loan is one of the most common ways to capitalize a company in its early stages. This way, when a company earns revenue, the company can choose to pay back the loan to the shareholder. Instead of having this money paid as taxable income, the shareholder may receive the money as a repayment of a loan. 

A Shareholder Loan Agreement documents the shareholder's loan to the company and lists all the terms of that loan. This agreement helps clarify that a loan has been made, and it is particularly helpful if the anyone raises questions about whether a  payment was truly intended to be a loan.

A Shareholder Loan Agreement is usually dated on the day that the money is transferred from the shareholder to the corporation. It does not necessarily need to be dated on the same day the agreement is prepared.

A loan typically has an interest rate. In most situations, a shareholder will lend money to the company at a very low rate of interest. The shareholder does not usually intend to make money through the low interest rate. Rather, the shareholder will include a low interest rate to provide further evidence that the money advanced to the company was always intended to be a loan. This will assist the shareholder if the nature of the loan is ever called into question. A shareholder loan can sometimes be made without interest, if both the shareholder and the company agree.

Dividends are payments made from the company to one or more shareholders. Unless the company has made a separate agreement (like a Shareholder Agreement), dividends are paid at the discretion of the directors. Because the directors can decide to pay dividends at their discretion, shareholders often want a restriction in the Shareholder Loan Agreement to say that no dividends will be paid until the shareholder's loan is repaid. Of course, the shareholder can always waive this requirement and allow dividends to be paid before the loan repayment. But this restriction takes away the discretion of the directors on this issue and ensures the lending shareholder will determine when the loan is repaid.