Making a loan to an LLC

[Bienes Raices]

What would be the rationale for making a loan with a promissary note from your personal name to your LLC instead of just making a capital contribution? Is there some tax advantage to doing that? It seems simpler to just make a contribution.

[Jeff S.]

It all boils down to being in court. Making a loan is just an extra safe practice that may or may not make a difference. My attorney also advised against having a loan with a due on sale clause. If you are a single member it has less consequence than having multiple members. An attorney on here stated with a single member LLC you could move money in and out without any fanfare.