What is LLC (Limited Liability Company)?

A limited liability company is a business structure formed under state law that generally shields owners, called members, from personal liability for the company's debts. LLCs offer flexible management and tax options. Owners should understand that limited liability does not protect them from obligations they personally guarantee, which is common in small business lending. Lenders typically request the articles of organization and operating agreement to confirm ownership and signing authority.

Example

Two owners form an LLC for their landscaping business and list their ownership percentages in the operating agreement.

Related terms

Lien PositionLoan-to-Value Ratio (LTV)Maturity DateAll terms