Can a start up company (LLC) get a unsecured loan?

Asked in Atlanta, GA - over 3 years

Hello, I am thinking of starting a new business. I have some capital to invest but will need a loan (not huge: around $50,000) to start up. This business is high risk and so I am worried what will happen if I am not able to repay the loan. I was thinking of setting up a LLC and look for a unsecured loan. Is that possible? Can my newly formed LLC (which does not have any business credit) get a unsecured loan? Would I have to sign a personal guarantee when I get such loan for my business? Who would be willing to provide a unsecured loan to a newly established LLC? Thank you

Attorney Answers (2)

Glenn M. Lyon

Atlanta Limited Liability Company (LLC) Lawyer

Licensed in GA

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1

Answered over 3 years ago. Very unlikely, but certainly not legally impossible. Most lenders require personal guarantees / co-signing if the business has been in operation for less than two years. And given the current environment, it is probably even more difficult than that.

If you would like to discuss any issues further, please feel free to contact my office. My contact information is below. Thank you.

The foregoing is general information only, not specific legal advice. No attorney/client relation has been created or should be implied.

MacGregor Lyon, LLC

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Robert John Murillo

Boulder Business Attorney

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2

Answered over 3 years ago. In this lending environment it is not likely that a new business could qualify for an unsecured loan. Most lenders will require that you have regular income, personally guarantee the loan and have assets that can be secured. Of course this all depends. You may want to contact the SBA for their programs and other options.

Alternatively, you could try to get funding by issuing securities in a private offering. This is an extremely complex area of law and something that requires legal counsel as you need to comply with myriad state and federal laws.

You should speak with a local attorney regarding your issue. Contact people you know and trust for referrals. If you have no referrals, contact your local bar association for their referral program. Good luck.

DISCLAIMER—This answer is for informational purposes only and discusses general legal principles, trends, and considerations and is not intended as specific legal advice regarding your question. This answer does not establish an attorney client relationship. For legal advice, you should retain legal counsel in your state for advice regarding your specific circumstances.