Lending to LLC for Family Vacation Home

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Lending to an LLC
Posted by: Chick Aug 23 2004, 04:53 PM
Our family has a vacation home. It has a foundation, is fully paid for, and presently the lot and building are assessed at $300K. We would like to use the equity to do a major renovation, but of course would like to avoid having to sign personal guarantees. Any suggestions as to how to go about this process?

Thank you in advance.
Posted by: loanuniverse Aug 23 2004, 06:36 PM
What do you mean by “it has a foundation”?

Why would you like to avoid giving a personal guarantee? In fact, chances are that an individual owns the property. If this is the case, whoever owns the property will be the borrower.

Most bank lenders require a personal guarantee even when real estate is involved.

I would look at this from a practical perspective. If I have a property worth $300,000 and I am looking for $100,000 to improve it, but somehow something goes wrong, would I walk away from the remaining equity? The answer is “probably not”. Since I am not walking away, I might as well guarantee the darn thing.

Now if you get someone to lend you $100,000 to your company without a guarantee, but there are no assets worth fighting for, I might walk away.
Author: Commercial Loan Underwriter