Class Overview
This class provides a comprehensive overview of the entity documents required for commercial loans. It focuses on the types of entities that can borrow, the specific documents needed for each entity type, and additional requirements for individuals associated with the borrowing entity. By the end of this class, participants will understand the importance of collecting and submitting the necessary entity documents to ensure compliance and successful loan processing.
Questions and Answers
1. 1. Which types of entities can commercial lenders lend to?
- Individuals
- Limited Liability Companies (LLCs)
- Corporations
- Both B and C
Answer: D. Both B and C
2. 2. What is required from an LLC to verify its formation?
- Certificate of Incorporation
- Operating Agreement
- Certificate of Formation (or Articles of Organization)
- Partnership Agreement
Answer: C. Certificate of Formation (or Articles of Organization)
3. 3. What alternative document can corporations provide if they cannot share their bylaws?
- Operating Agreement
- Incumbency Certificate
- Partnership Agreement
- Certificate of Limited Partnership
Answer: B. Incumbency Certificate
4. 4. What must be resolved before closing if an individual associated with the borrowing entity has an open judgment over $50,000?
- A letter of explanation with resolution details
- The judgment itself
- Credit score requirements
- Underwriting approval
Answer: B. The judgment itself
5. 5. What is not an acceptable background condition for individuals associated with the borrowing entity?
- Financial felonies within the specified timeframes
- Lawsuits settled within the last five years
- Open judgments under $50,000
- Bankruptcies outside the specified timeframes
Answer: A. Financial felonies within the specified time frame
Conclusion
Understanding and collecting the required entity documents is crucial for the successful processing of commercial loans. By ensuring compliance with these requirements, commercial lenders can streamline the loan approval process and avoid potential legal issues. Always consult with legal counsel when necessary and stay informed about any changes in regulations or document requirements. Remember, the key to a smooth loan process lies in thorough preparation and adherence to guidelines.
