Borrowing Resolutions

Description

If the borrower or signer on a Promissory Note is a limited liability company, the lender should obtain a resolution signed by the minimum number of member(s) or manager(s) required to approve the loan as provided in the LLC’s Operating Agreement.  If the LLC does not have an Operating Agreement then the loan must be approved by the minimum number of member(s) or manager(s) as provided in Arizona Revised Statutes Section 29-3407.

The purpose of the resolutions is to prevent the company from claiming that the person who signed the Promissory Note and any other loan documents did not have the authority to sign for the company and therefore the company is not obligated to pay the Promissory Note.

Warning for Lenders:  Don’t loan money to an LLC without obtaining a borrowing resolution signed by the appropriate member(s) or manager(s). Commercial lenders always require a borrowing resolution as a condition to making a loan to an LLC.

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