Multi member LLC credit check

[Manny Rivas]

I have great credit although my business partner does not. We want to invest in a few properties together using both of our money down but he does not have good credit. I'm using LegalZoom to form a Multi Member LLC for the purchase of the properties. Will his credit affect the process of getting a commercial loan for a property or can they solely use my credit? He's working on taking care of his but it's not going to happen overnight.

Will this negatively affect business credit card applications? We probably will need to apply for credit as well for remodels.

[Nick Belsky]

@Manny Rivas

This really comes down to the lender. For DSCR and commercial lenders, you can often adjust the operating agreement in various ways to make one member the guarantor where only that member's credit is pulled. Usually, by pushing the ownership percentage down below 20%, or so, will allow that member to contribute capital or experience, but not credit. Some lenders are 51% + can be the only guarantor. Some require all members to guarantee...

Working with a mortgage broker is probably your best bet to save yourself some time on this.  Lots of ins and outs around this and brokers know their resources well enough to know who to work with your scenario.

Cheers!