Shareholders have invested .5 million in the company. The company has very low debt but it is at a high interest. We want to refinance but the shareholder loans show up as a big liability on our balance sheet. This affects our ability to refinance as the debt to equity ratio looks bad.

How do we convert our shareholder loans to share equity to improve balance sheet?

Give the shareholders stake in the company. i.e. issue stock for the loans.