Commercial Lending for Syndications

[Grant Thompson]

Hello BP,

My business partners and I (the Managing Members) have raised capital through a syndication to invest in multifamily properties. We are having issues finding a lender offering commercial loans that meet our needs. I have reached out to over a dozen and they typically require any investor over x% (typically) to be on the loan, however we do not want to require any of our passive investors to be guarantors. Our operating agreement assigns all day to day management responsibilities to the Managing Members and we are willing to be the guarantors.

Does anyone have experience financing a deal with a similar structure? Is it possible to find a lender who will not require our investors to be on the loan?

[Marty Johnston]

@Grant Thompson There are lenders out there who will allow for just 1 member of the LLC to PG the loan. This % may simply vary, and may require you amending your current operating agreement/bylaws (Shares ledger). Some state that anyone with 20%+ ownership must PG the loan, so this would mean just amending the OA/Bylaws to show that only 1 member has more than 20% ownership in the entity.

Others are more flexible - as long as the Guarantor owns 51% ownership of the entity, the remaining members can have any % of ownership without having to PG. They'll simply have to sign a corporate resolution before close (signed by all members) stating that they approve of this particular transaction and all agree to give "____" signing authority on behalf of the entity.

Pretty basic stuff. Hope this helps!
-Marty Johnston