Do I Need an Operating Agreement to Close an LLC Loan?

We close loans in LLCs every week — ours and our clients’. Between Aspire Mortgage and our own flipping company, Beard Bros Build Co. (100+ projects in Omaha since 2019), we’ve seen exactly which entity documents hold up a closing and which get waved through. Here’s the straight answer.

Why Lenders Ask for the Operating Agreement

When an LLC borrows, the lender isn’t just underwriting the property — they’re underwriting the entity’s authority to sign. The operating agreement tells them three things: who the members are and their ownership percentages, who is authorized to execute loan documents, and whether the LLC needs member consent to pledge the property as collateral. Title companies check the same things before they’ll insure the transaction.

What Your Operating Agreement Needs to Cover

• Member names and ownership percentages. These must match the loan application. Most DSCR lenders require any member with roughly 20–25%+ ownership to be a guarantor.
• Manager or member authority to borrow. Explicit language that the manager (or members) can obtain financing and encumber company property.
• Signature authority. Who signs at closing. If it’s manager-managed, the manager signs; if member-managed, expect all members at the table.
• Consistency with your Articles of Organization. The entity name, state of formation, and structure must line up exactly. A one-word mismatch can bounce a closing package.

What If You Don’t Have One?

Single-member LLCs formed online often skip the operating agreement entirely — the state doesn’t require it in most cases, but the lender will. The fix is simple: adopt one before closing. A basic single-member operating agreement can be drafted and signed in a day. Don’t overthink it, but don’t hand the lender a template with someone else’s state and blanks left in it either. We’ve watched that add a week to a closing more than once.

The Rest of the Entity Package

The operating agreement travels with a small stack of documents. Expect the lender and title company to also ask for: Articles of Organization (or Certificate of Formation), a Certificate of Good Standing from your state, your EIN letter from the IRS, and sometimes a borrowing resolution signed by the members. In Georgia, entity borrowers are the only way we can arrange business-purpose loans at all — so there the entity package isn’t optional, it’s the deal.

One Thing Investors Get Wrong

Forming the LLC the week of closing. Lenders don’t generally require seasoning on the entity, but rushed formations create mismatched documents, missing good-standing certificates, and EIN letters that haven’t arrived. Form the entity when you start shopping for the deal, not when you’re clearing conditions.

Frequently Asked Questions