We have a commercial loan (1 loan) to 3 entity borrowers. Borrower A is owned by the husband and wife. The wife has no ownership interest in Borrower B or C. The account officer would like the unlimited guaranty of the wife. Would an unlimited guaranty raise any issues as she does not have any ownership interest in Borrower's B and C? She can guaranty as it relates to the business she has ownership in but the loan is to all 3 entities. I'm not sure to document this. The other two entities are messing me up so I am not sure how to advise.

What is your bank policy on who is required to guarantee commercial loans?

We don't have a specific policy on who is required to guaranty. We follow Reg B when it comes to spousal guarantees. Can we require an unlimited guaranty on the loan due to her ownership in one of the borrowing entities?

Normally yes - but without a policy that outlines who is required to guarantee a commercial loan to closely held corporations, then how do you know when or when it is not required. I also have seldom heard of a bank lending to multiple entities in this fashion.

So after inquiring a little further, our process (although it is not specifically stated) is we require anyone who has 25% or more ownership to guaranty however if it is less it doesn't preclude us for asking for it. The spouse has a small % of ownership in Entity A, and has involvement with Entity B and C, although no ownership.