How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask FLCORPLAWYER Your Own Question
Category: Business Law
Satisfied Customers: 4634
Experience:  23 Years business & securities law, NY and FL bars. SEC all states.
Type Your Business Law Question Here...
FLCORPLAWYER is online now
A new question is answered every 9 seconds

Can one member of an LLC take out a personal loan and use business

Customer Question

Can one member of an LLC take out a personal loan and use business equipment as collateral or do both members have to approve this? Also, the equipment isnt technically owned yet as it is financed in with the lease until 3-1-12
Submitted: 5 years ago.
Category: Business Law
Expert:  FLCORPLAWYER replied 5 years ago.
LLC assets cannot be used to provide collateral for a personal loan. It should not even be done if all of the members of the LLC approve. It destroys the line between the LLC and it's members. Pledging equipment that you do not yet own for a loan is a crime.
Customer: replied 5 years ago.
I dont have any proof except that she mentioned that she took a loan out and hocked the equipment. I havent seen any paperwork which Im sure she wont provide me. What if it was in the business name and not her personal name? grrr. Is it possible to dissolve the llc and just walk away? I cant trust her.
Expert:  FLCORPLAWYER replied 5 years ago.
You can demand dissolution of the LLC. An accounting would have to be done and she would have to open up the books. If the loan is in the business name it is not as bad, but she still used collateral the LLC does not own to collateralize the loan which is a felony.

Related Business Law Questions