Using an LLC as a Guarantor on a Commercial Loan

[Kim Hopkins]

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

[Greg Downey]

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