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CalAttorney2
CalAttorney2, Attorney
Category: Business Law
Satisfied Customers: 10244
Experience:  I am a businesses law attorney, with experience advising and representing owners and investors.
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I have an LLC (First LLC) thru which I own and operate 3

Customer Question

I have an LLC (First LLC) thru which I own and operate 3 hair salons. The 3 salons are financed through a bank (First Bank) . I am trying to start a fourth salon and my new lender (Second Bank) has advised that I need to create a new company (New Co LLC)
to be funded. The new company will allow the Second Bank the first lien against the business. I would like, however, to continue to run my business thru First LLC and have already signed a lease in the First LLC's name. What options do I have as regards inter-company
loans or leases to do that? Can New Co LLC receive the loan, buy the equipment and lease it to First LLC? What types of arrangements are possible?
Submitted: 2 years ago.
Category: Business Law
Expert:  CalAttorney2 replied 2 years ago.
Yes it is possible for LLC 1 to hold the lease and allow LLC 2 to use the space, while leasing equipment etc. from LLC 1.I would recommend speaking with a local attorney to help you structure this business to be most advantageous to you (perhaps even trying to renegotiate your lease so that it names LLC 2 as the tenant - the benefit here would be segregating your liability, so that your creditors for LLC 2 can only reach assets for LLC 2 and your creditors for LLC 1 cannot reach assets for LLC 2).(Some business owners would segment it even more, so each shop would be operated under a separate LLC).The reason I would recommend working with a local attorney to help you with your documentation when you sort out this relationship is that you have a somewhat complex relationship due to the lease being in one entities' name, while the loan to operate under another's and the equipment owned by the first. You really will want the documents to be clear and concise - this isn't something that you can pull from a form library or copy from something online easily.You can find local attorneys using the State and local Bar Association directories, or private directories such as www.AVVO.com; www.FindLaw.com; or www.Martindale.com (I personally find www.AVVO.com to be the most user friendly).