It is possible to borrow money from a limited liability company in which you are a member. The specific manner in which you do so depends on whether you have elected to treat your LLC as a corporation or as a pass-through entity for income tax purposes, and whether there are other members. If there are other members, you must get their approval. If you are treating the LLC as a pass-through entity, you do not need to borrow money from it -- you can just take cash out of the company as a draw. You will pay or will have paid income taxes on the money anyway.

Step 1.

Contact any other LLC members, and get their approval in advance, in writing.

Step 2.

Draft a promissory note. The note should specify the terms of repayment, any collateral and a fair market interest rate. This rate should at approximate the interest rate the LLC pays to its own creditors. At a minimum, use the interest rate the IRS charges on overdue debts. Make sure the transaction would be a reasonable transaction even if the loan were to someone else.

Step 3.

Record the loan as an asset on the company's financial statement. If anyone buys or sells an interest in the LLC, that promissory note is an asset of the company and is material information, as is the status of the loan, whether it is delinquent or if it is being repaid on time.


Some states restrict the ability of companies to lend to their own owners or directors. You may wish to speak with an attorney or accountant prior to entering the transaction.

Don't commingle business and personal funds. This could endanger the limited liability protection of your entity.