Can and LLC obtain a LINE of credit?

Question

We are looking at our first commercial property, triple net lease. We have an LLC that we quit claimed three properties into. We probably have about $400-$500K of equity in those properties. Can the LLC get a line of credit and use that line to finance the commercial property? Also, would a bank take into Acct the revenue from the lease? thanks,

Greg Kasmer · Answer

Brian - I think pulling the money out is a good idea as long as what you are generating from that money can be put to work to pay off the principle and interest from the loan/line of credit. I've found very few banks willing to do a loan/line of credit in a second position (on top of an existing mortgage) so that may be a challenge for you. I have found some banks willing to provide unsecured lines of credit for a LLC, but in my experience those lines start small ($25k), but over time you can ask for increases and maybe get a $75-$100k line of credit in a few years. Good Luck!

Ronald Rohde · Answer

its more leverage, its more risk. up to you

David Ramirez · Answer

Yes, as long as your LLC has a decent credit score and can prove it can pay back the credit line, you might be able to get one. But the lender might also want some backup, like collateral or a guarantee from the LLC's members. Good luck!

David Lodato · Answer

Hello Brian, as a direct conventional lender in Princeton Region we can explore the opportunity for you to pull equity out of the properties as security for a business line of credit. We can collaborate with you and put together a term sheet that would outline the credit facility. We are looking for stabilized rental income of 2 years showing on a tax return. Typically we are talking about a term loan not a business line of credit if the purpose of the loan is a purchase. The business line of credit would be used to provide a reserve for renovations needed on the real estate portfolio.

David

Bryan Martin · Answer

It is possible for an LLC to obtain a line of credit and use it to finance a commercial property. However, the availability of credit and the amount you can borrow will depend on factors such as the LLC's credit history, income, and assets.

When applying for a line of credit, the bank or lender will likely consider the LLC's creditworthiness, as well as the value of the properties it owns. They may also take into account the revenue from the triple net lease on the commercial property you are considering purchasing, as this could be an indicator of the LLC's ability to make the loan payments.

John M. · Answer

Yes you can get a line of credit on residential investment properties to help with your purchase. If you're going through a bank they will look at the length of the lease, type of tenant and of course your PFS/ability to pay.

Brian Plajer · Answer

@RonaldRohde, yes, the thought was maybe we can pull $100-300K out and use that to fund another deal if need be. Is that a bad idea for someone that doesn't have a lot of liquidity?

Ronald Rohde · Answer

Based on those numbers, what are you going to pull? $1-200k? Its essentially a personal LOC at this level.

Can and LLC obtain a LINE of credit?

Can and LLC obtain a LINE of credit?

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