I was told that when doing a loan on a DBA that the signers were always the primary borrower. However I was just told by another person that if the business has a seperate tax ID number that the business is the primary borrower. Which one is correct? Can somebody please clear up my confusion?

I guess both could be right! If the dba is a sole proprietorship - then the signer on the loan and the business are one and the same - so he/she is the primary borrower.

Other types of legal entities can do business as something else as well (for example, XYZ Corporation dba Joe's Pizza). In that case, principals for XYZ would sign the loan docs, but they're not the primary borrowers - XYZ Corp is.

Does that help?

I'm assuming you mean a sole proprietorship. Remember - corporations and partnerships can also have a d/b/a.

If you are talking about a sole proprietorship, the individual is your primary borrower and is responsible for the repayment. From my understanding and Georgia law (I don't know where you are located), even if the entity has a Tax ID, it is still the individual.

When you say d/b/a/ think “fictitious name” and the misunderstanding will evaporate.

I'm in New Mexico, but the second person that said it all depends on whether the Tax ID exists or not said that that's per the FDIC. I have no idea where she found this. And yes this particular situation is a sole proprietorship, but with the example that Lestie G gave, would XYZ still be the primary borrower if Joe's Pizza had it's own Tax ID? I appreciate all your help, but I'm still quite confused. Care to school me some more? Thankyou you guys are great.

As Tom said, think fictitious. If you make a loan to XYZ Corp. D/B/A ABC Co., who are you making the loan to? XYZ or ABC? You're making the loan to XYZ. XYZ is simply operating under a fictitious name.

The fact that someone files for a trade name (trade name affidavit, assumed name certificate, etc.) or obtains a TIN number, does not make them a registered organization, a non-registered organization, or a natural person. The d/b/a/ is just a fictitious, made up, pretended, untrue, fabricated name and not a legal entity. It is just no one and nothing.

Thankyou all so much, you've been extremely helpful. I kind of got thrown into this compliance job and I don't know how I'd make it through the week without all the help I get from BOL. Thanks again!!!!

Welcome to our world. I just have one item to add. When you underwrite a loan application from a d/b/a, you are considering the risk. Risk is presented both by the business and the business owner. So, as a practical matter you are looking at both. The reports that you compile would probably include a Dunn & Bradstreet which is on the business and a credit report which is a consumer report about the individual owner. The D&B is subject to business customer information and privacy rules while the credit report about the owner is subject to all the consumer protections of the Fair Credit Reporting Act. Thus, you really need to think about both legal standings -business and individual -- when making the loan. However, the person or entity to whom the obligation is made and the way in which the note is signed would determine "who" or "what" the borrower actually is.