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#1802752 - 04/09/13 03:54 PM Two companies on one DDA account?
TMatt87 Offline
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Let me preface this by saying I know absolutely nothing about deposit side compliance, so I apologize if this is a stupid question:

Can we have two separate companies on the same DDA account? We are doing a construction loan to a dentist that will also include the purchase of the dental equipment. We require construction draws to be disbursed into a checking account and then cashiers checks used to pay contractors. In this situation, the dentist operates two separate LLCs and wants the real estate portion to be under one company and the equipment under the other. To simplify things, we want to have the same checking account for both purposes. Are there any issues with this?

Thanks for any help.
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#1802761 - 04/09/13 04:03 PM Re: Two companies on one DDA account? TMatt87
rlcarey Online
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We require construction draws to be disbursed into a checking account and then cashiers checks used to pay contractors.

Why bother with the checking account?
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#1802793 - 04/09/13 04:41 PM Re: Two companies on one DDA account? TMatt87
TMatt87 Offline
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I'm told it has to do with tax issues... 1099s I think. Anyways, that's the way our policy is written.
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#1802805 - 04/09/13 05:06 PM Re: Two companies on one DDA account? TMatt87
rlcarey Online
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Galveston, TX
Well, there are other questions - if the loan is to the dentist, why is the account not in his name. If the loan is to the two entities - how is that possible unless they applied jointly. There is a reason that he has two companies - without a separation of assets and liabilities, it will pierce any corporate veil that he has tried to create.
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#1802815 - 04/09/13 05:14 PM Re: Two companies on one DDA account? TMatt87
Kathleen O. Blanchard Offline

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Perhaps the loans need to be done separately..one to each LLC for the corresponding purpose (construction and equipment) with separate checking accounts.

To do otherwise defeats the purpose of separate LLCs, as Randy has said above.
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#1802827 - 04/09/13 05:36 PM Re: Two companies on one DDA account? TMatt87
TMatt87 Offline
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I totally agree, but our commercial lenders like to bundle loans for some reason. I think it is because one of the entities would qualify for SBLF (small business lending fund) credit. I'm not really involved with the transaction, so I don't know the details, but it sounds like the loan officer just needs to separate the loans.
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#1803181 - 04/10/13 02:53 PM Re: Two companies on one DDA account? TMatt87
Elwood P. Dowd Offline
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Two business entities can open a joint account when they are engaged in a joint venture. The documentation would be somewhat complex and would be a lot to ask of a customer just to be able to use a funding mechanism preferred by a particular officer.
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