Could someone please clarify/define "not an affiliate of the borrower"? Would an actual affiliate be an individual who has ownership in the subject borrowing entity, and/or could it be another business owned by the same individual(s) as the subject borrowing entity? If such were guarantors, and the loan had dependence on the strength of the guarantor and/or this guarantor is the true revenue maker who will be making the loan payments via rent to the subject borrowing entity...It has also been observed that guarantors have started businesses while having other successful businesses that make large revenue, and there are statements that mention the strength of the guarantor, sometimes referencing these other businesses. Where do we draw the line? Non-owner guarantors vs owner guarantors? Individual guarantors vs business guarantors? Etc.? All incite and feedback are appreciated.

The guarantee of an individual (or non-affiliated entity) is not a factor in determining what GAR to report. See §ll.42(a)(4)—1: When indicating whether a small business borrower had gross annual revenues of $1 million or less, upon what revenues should an institution rely?

The answer cites an example of a sole proprietor as a situation in which the GAR would not be adjusted for reporting purposes. In other words, even a sole proprietor (in which the business and individual are not distinguishable) the GAR of the owner is not considered in the GAR.

What about a corporate guarantor, namely the one that will occupy the property and truly service the debt? If this corporate guarantor was utilized in the DSCR and their revenue amount for the previous year is mentioned in the underwriting notes, shouldn't we use their revenue in determining the appropriate Revenue Code?

What about a corporate guarantor, namely the one that will occupy the property and truly service the debt? If this corporate guarantor was utilized in the DSCR and their revenue amount for the previous year is mentioned in the underwriting notes, shouldn't we use their revenue in determining the appropriate Revenue Code?

If the company is guarantor of a loan to another company and their is an affiliation between the two companies and if the bank relied upon the revenues of the related guarantor then you would include their GAR with the borrower's GAR.

Adding to this thread. If a loan is being originated on behalf of two individuals and we're using the revenues of an LLC (where one of the individuals is the sole member) to render the credit decision, would we consider the revenues of the LLC when reporting the revenues? It was my understanding that in this scenario the LLC is not an affiliate to the individuals (i.e., borrowers); therefore, the LLC's revenues would not be reported. Welcome your comments.

Duplicate post: https://www.bankersonline.com/forum...iduals-with-llc-as-guarantor#Post2258026