Our bank does a lot of commercial lending for investments of overnight rentals. Many of these loans are to entities. Is it ok to require the owner of an entity to be a co-borrower on this type of loan solely because it is a loan secured by an overnight rental? Even if the entity would qualify on it's own?

Or do we really only have the right to require the owner to be a guarantor?

Thanks in advance!

Why would you make them a co-borrower?

Paragraph 7(d)(6).
1. Guarantees. A guarantee on an extension of credit is part of a credit transaction and therefore subject to the regulation. A creditor may require the personal guarantee of the partners, directors, or officers of a business, and the shareholders of a closely held corporation, even if the business or corporation is creditworthy. The requirement must be based on the guarantor's relationship with the business or corporation, however, and not on a prohibited basis. For example, a creditor may not require guarantees only for women-owned or minority-owned businesses. Similarly, a creditor may not require guarantees only of the married officers of a business or the married shareholders of a closely held corporation.