One of the most common ways to expand your business is through borrowing money. Interest rates are historically low right now making debt an attractive way to grow one’s business. Few ask whether their business is legally ready to borrow money and in those situations seeking the advice of a skilled attorney is not only recommended but even required by some lenders.
Some matters to be considered in borrowing money are as follows:
- Does your business’ operating agreement or by-laws have special requirements to borrow money?
- Does your limited liability company operating agreement contain the requisite provisions to allow for non-recourse financing and non-recourse deductions?
- How will any personal guarantees impact my operating agreement or by-laws?
- How will this financing arrangement impact other agreements outside my operating agreements?
These are but a few of the issues that should be addressed before deciding to borrow money. Retaining an attorney to help guide you through these, and other issues, will ensure your business safely borrows money.
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