Skip to content

Let's keep in touch

Subscribe to our newsletter for timely insights and actionable tips on your real estate journey.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions
Followed Discussions Followed Categories Followed People Followed Locations
Commercial Real Estate Investing
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

User Stats

259
Posts
74
Votes
Kim Hopkins
  • Investor
74
Votes |
259
Posts

Using an LLC as a Guarantor on a Commercial Loan

Kim Hopkins
  • Investor
Posted

Hello!

We are working with a credit union on a loan for a commercial property acquisition. The loan is full recourse. In the past, we've just listed ourselves as individuals (or maybe our trust, I forget) as the guarantor. 

This time, we noticed there is an option to list an LLC as a guarantor. This seems like it might be advantageous as it might add a layer of protection.

If that's the case, what sort of structure for the LLC would be best? Here's the LLCs we already have:

       • About 15 LLCs that each hold one individual property. I'm sure those are out since they each only have ownership in one property.
       • An asset management LLC that has no interest in any properties. That would be ideal for us but I'm guessing the lender wouldn't allow it since it doesn't have interest in any properties
      • A new holding company LLC but it only has an interest in one smaller property we bought last year (our GP interest). 

Are any of these good candidates? If not, is it worth it to set up a new LLC? Does it actually offer more protection? And if so, what ownership should it have?

Yes I know this is a question for my attorney who I've already asked, but he just said "generally the lender will want to see assets in the LLC" so I'm looking for answers here from experienced investors and their best practices. No, I do not consider this legal advice.

Thank you!

Kim

Most Popular Reply

User Stats

379
Posts
180
Votes
Greg Downey
  • Lender
  • Springfield, MO
180
Votes |
379
Posts
Greg Downey
  • Lender
  • Springfield, MO
Replied

@Kim Hopkins, whats the word? You have all of us legal and loan guys on the edge of our seats.

Loading replies...