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Joint Intent Needed on Corporate Application?
Dan Persfull, John Burnett and Randy Carey, BOL Gurus
Guru Bios
Question: When a corporation is applying for a loan, and we are requesting both spouses sign personal guarantees, the intent to apply is the corporation's intent -- it is the applicant, so would we need to obtain the intent to apply jointly form completed on both spouses?
Answer by Dan Persfull: No. You are requiring their guarantees, therefore there was no joint intent.
Answer by John Burnett: I urge you to make certain that your requirement of spousal guarantees does not violation Reg B, section 202.7(d).
Answer by Randy Carey: John is correct. You have to first look at your loan policies to see who your institution normally requires to guarantee a loan to a corporation. Normally, on closely held corporations, a bank will require that either the major shareholders or officers personally guarantee the loan. There should never be a mention of spousal guarantees in your loan policy. If the spouses are the shareholders/officers, then there are no problems. If both spouses are not shareholders/officers of the corporation, and the shareholders/officers do not qualify for the credit requested, then you can counteroffer with the condition that other guarantors be presented. Again however, you could not specify a spouse.
This whole process should be duly documented in the loan file, and an intent to guarantee should be gathered from any party that is added to the transaction after you exhaust your normal guarantors.
First published on BankersOnline.com 02/27/06
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