Do I need an LLC to get a hard money loan? Do I need an EIN?

13 Replies

I've talked with several hard money lenders and they are all telling me they won't loan to individuals, only LLC's.

So, I just got my LLC. Do I need an EIN number for my business now? How about a business bank account and credit card. Is this just a way of separating my personal assets from my business entity assets?

@Karen Warren Apply for an EIN number through the IRS it's free and takes 5 minutes. A business bank account is essential to make it look like you and your LLC are separate entities. A business credit card is nice because you can earn cash rewards, but it's not essential to start.

@Karen Warren HMLs don't follow the Frank Dodd conventional disclosure and regulatory requirements, and therefore are prohibited from lending on an individual's primary residence. The entity requirement is one more layer of protection for them to show that they are, in fact, only lending on business purpose loans. 

@Karen Warren I know lendinghome and first equity funding do, and I believe patch of land will, but they'll set up an LLC for you. BP has a hard money lender database, search through that and I'm sure you'll fine more.
Originally posted by @Karen Warren :

@Jason D. Really? Which ones are they?

 Yes, several. I could name one, but I would get in trouble with BP. The entity requirement is prevalent, but not universal for the reason I mentioned above. 

While it's true that HMLs can lend to both individuals and entities, you might be investing in a state that restricts HMLs to only lend to an entity.  I know that LendingHome does consider NC to be an "Entity Only" state.

@Jason D. LendingHome also classifies FL as an "Entity Only" state as well, although it might only be in Dade County.