Operating Agreement and SBA Loan as LLC vs Individual

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by a searcher from Harvard University - Harvard Business School
in Los Angeles, CA, USA

1mo ago

Operating Agreement and SBA Loan as LLC vs Individual

Edited Post: Thanks to everyone who responded. I am realizing I phrased the initial question poorly. Along with a group of investors, I am buying a business as an asset purchase. We've established a NewCo and a HoldCo, the former being 100% owned by the latter. I will own the largest slice of the HoldCo but not greater than 50%. Other investors will round out the rest of the equity, all under 20%. The question is, who should be the equity holder for HoldCo? Me, as an individual, or an LLC that I own outright? Original Post: I'm working with a sole investor on an acquisition in which I will be 1) full-time operator 2) minority owner at <50% 3) Largest equity holder 4) SBA Loan Guarantor. I am considering running the deal and loan through an LLC rather than as an individual. Would you recommend/not recommend using an LLC? Thanks. Any downsides either way?

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reply by a searcher 1mo ago
from Western Michigan University in Grand Rapids, MI, USA

If you are raising equity from investors, your operating agreement and sub-docs will be just as important to the deal as the purchase documents. Both document packages will control how you will operate post-closing, and that will impact how the deal performs.

reply by a professional 1mo ago
from Howard University in Los Angeles, CA, USA

Thanks @redacted‌! @redacted‌, I say yes. As a deal guy/entrepreneur, you should separate your business holdings from your personal name.