In the legal world, everything comes down to the fine print. The details in your operating agreement (though hopefully written in a font that’s legible) become especially important when a sticky situation arises. One such situation? A business partner taking out a loan without the other partner’s consent.
What Does Your Operating Agreement Say?
Whether or not you can get a business loan without your partner’s consent comes down to what’s written in your operating agreement. Did you and your business partner(s) decide it is ok for one partner to have the authority to take out a business loan without signed permission from the other partner? Then yes, you may be able to apply for a loan and would have the signing authority to do so, depending on the details of your agreement.
That said, a second issue to consider when it comes to business loans revolves around liability and responsibility. Who will be responsible for paying back the business loan? Will it be the individual partner who took out the loan, will both partners be personally responsible for paying back the loan, or will it be the company or some combination of personal and company liability? This matters immensely because you don’t want to be faced with a personal loan responsibility you didn’t consent to.
Put Everything in Writing
The solution to preventing many partnership problems can be made simply by putting everything in writing. It may seem like overkill when you’re just forming your partnership, but planning for all eventualities can help save you from frustration and disaster down the road.
Issues like getting a loan without a partner’s consent, selling shares without first offering them to your partner, and who has the rights to make what decisions absolutely must be addressed in your LLC’s operating agreement. Our team at the Law Offices of Alex D. Sirulnik, P.A. can help. We have extensive experience drafting corporate agreements for our clients across Florida and are ready to help you. Get in touch with us today to schedule a consultation.