San Diego, CA asked in Banking, Business Formation, Business Law and Gov & Administrative Law for California

Q: Regarding EIDL loan

I receive an email today from SBA.gov and they asked me for the following information.

Why would they ask me for this information now when I already got approved?

They are also asking me "A statement that the LLC held a meeting and specify the date" I don't hold meetings would that cause a problem or what is the proper way to reply?

Thank you in advance!

Good afternoon,

Per your Loan Authorization and Agreement, please provide the following document(s):

1. Please provide a Certificate/Resolution that includes:

a. A statement that the LLC held a meeting and specify the date (on or after loan approval date of 6/2/2020)

b. A statement that the LLC authorizes acceptance of the SBA loan and specifying the

loan amount of $11,300

c. A statement designating an individual or individuals by name and title authorized to

sign the SBA loan closing documents

d. The statement should be dated and signed by at least one

member/manager/managing member of the LLC.

3 Lawyer Answers
Shawn R. Jackson Esq.
Shawn R. Jackson Esq.
Answered
  • Business Law Lawyer
  • Rohnert Park, CA
  • Licensed in California

A: The short answer is that to qualify for the EIDL money, you would need to have had a meeting to authorize the LLC taking on that financial responsibility.

I would recommend that we schedule a free initial consultation to discuss additional requisite facts … and how to best move forward.

Julie King
Julie King
Answered
  • Business Law Lawyer
  • Monterey, CA
  • Licensed in California

A: Corporations are required by law to have annual meetings and prepare board resolutions addressing topics such as accepting government assistance. LLCs are not required by law to have these meetings or prepare resolutions, although many lawyers recommend LLCs do so anyway. The request you received demonstrates one of the reasons lawyers make that recommendation. In your case, the government just needs to see that the owners of the LLC have formally approved the acceptance of a SBA loan and agree to comply with all requirements of the loan, including paying it back if and when necessary. Having a document showing the LLC will be responsible for repayment helps the government avoid a borrower making the argument that the loan was not authorized by the owners, so it won't be repaid. Best wishes to your business and you!

Robert Philip Cogan
Robert Philip Cogan
Answered
  • Business Law Lawyer
  • San Diego, CA
  • Licensed in California

A: Different parts of the loan process include:

1. Deciding if the lender thinks that the borrower will be able to make the payments, and

2. Making sure that the corporate law formalities are followed.

There is no point in taking care of item 2 if item 1 does not result in an approval. After approval, item 2 must be handled. That is why they ask you questions after you are approved.

If you do not know how to answer the question about having a meeting you might want to consult an attorney who can take care of this for you.

You can call many attorneys for a free initial consultation.

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