Legal Question in Business Law in Colorado

Liability for LLC Debts

I own a building that some friends want to open a bar in.

They want me to have a small

interest in the LLC of 10%.

I am concerned that I will have liability for their SBA

Loan if I have any ownership interest. Is this true?

Is my liability limited by the size of my interest?

In practice, would the SBA require me to sign as an LLC

memeber and/or personal guarantor?


Asked on 10/13/06, 9:11 pm

1 Answer from Attorneys
Richard Gee

Re: Liability for LLC Debts

It depends on who is getting the SBA loan. Generally, an LLC member's liability is limited to his/her membership interest in the LLC. The liability is very much like that of a shareholder in a corporation.

However, if the SBA loan is to the LLC, it is highly likely that the SBA would require all members to personally guaranty the loan. Here it is possible that the guarantors would be personally liable for a default on the loan. I would be happy to discuss this issue further with you if you like. Please feel free to call me.

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Answered on 10/13/06, 9:28 pm


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