Borrowing as a LLC or Individual

2 Replies

I'd like to set up a LLC to protect me and any future assets I acquire but not sure how that will affect my borrowing ability. This will be my first property. How is borrowing affected when you borrow as a LLC as opposed to an individual.

Thanks,

Joe

I've dealt mostly with credit unions, but they've all been willing to lend to an LLC. You will be required to sign a personal guarantee, so you'll be on the hook for the loan. Your mileage may vary with bigger banks.

Hi Joe,

I formed an LLC to protect my personal assets when buying property. From my understanding, a lender will charge a LLC commercial interest rates versus individual home purchase interest rates. Commercial rates are typically higher than individual home loan rates. Further, if your LLC has no track record of income, as it was just formed, you may not even be able to get a loan. That said, you can buy under your name and then once the property closes, you can do what is called a "Quit Claim" to transfer the deed to your LLC. There may be other ways, but this is what I am aware of. Thanks, Sandhya