Financial statements for new LLC (partnership)

[Ron Jon]

I am planning on creating an LLC with a couple of partners to buy our first investment property within the next few weeks. All are active partners and have equal stake. My question is about the visibility of the personal financial documents that would be typically required by the lender. I am open to providing my current financial records i.e tax, payslips, savings etc to the lender but would like to keep that information out of view of the other partners. They would like to do the same. Is that possible to do when seeking a loan? I would definitely not be comfortable if my other partners get to view my tax and other information.

[Nick Belsky]

@Ron Jon

Loan Officers are considered fiduciaries and are subject to similar laws in most states.  Even when in a partnership, your personal finance information is NOT shared with the partners.  If you ever, ever, ever come across a loan officer that says, "yes it will be visible to all the other managing members", I'd find another loan officer.  

When doing a loan under an LLC, the lenders will want to see the credit worthiness of each managing member. Anyone with over a certain percentage of ownership (varies by lender). So if there are 4 of you all at 25% ownership, then all you would need to have your credit pulled. Your personal income and finances are normally of little interest to the lender, especially commercial lenders. Even when doing non-QM loans such as bank statements or Asset based loans, there has to be a sponsor who will be the basis of the loan. Their personal income and statements will come into play, but many lenders I work with won't lend to an LLC with more than 2 members on a bank statement or Asset based loan. Even then, the sponsor's personal income info stay private from the other members.

Alternatively, if the LLC is made up of 4 members and one of the members owns 51% of the LLC, while the other 3 are split up, only the majority owner may have their credit analyzed. It really does vary by lender. Be sure to ask your broker or lender how they view the structure of the LLC. Asking questions like this up front, can save you from unwanted surprises down the journey...

Cheers!