This review list is intended to educate you on the subject of this document and to aid you in its preparation. This is a necessary corporate formality that you should complete prior to your loan being granted in order to speed the process and indicate to your financial institution that you are in control.
Make several copies. Keep one in your company’s minute book and another in the loan or other relevant activity file.
Borrowing Resolution For A Corporation
Borrowing Resolution for a Corporation
A special meeting of the Board of Directors of __________________ ____, Inc., was held on ________________, at _________, _________, pursuant to, and, upon a motion made regularly and in proper order, and seconded, the board of directors of ___________________, agreed:
That the corporation shall borrow the original principal sum of $______(______________________&___/100 dollars) from ___________ _____________ bank, under such terms and conditions, including the pledging of collateral for the loan, and the opening or maintaining of deposit accounts, and such other terms as may be needful or required.
That the promissory notes, and any other certifications of indebtedness as well as any other warranties, bonds, indentures, and other agreements which may be required by ____________________, may be signed on behalf of the corporation by its President,
________________________________.
_________________________ by:
______________________________________________________ Dated:
Secretary of Corporation
______________________________________________________
Attest, PresidentBorrowing Resolution for a Corporation
Review ListThis review list is provided to inform you about this document in question and assist you in its preparation. This is a corporate formality that you should get done prior to your loan being approved in order to expedite that process and demonstrate to your financial institution that you have your act together.
1. Make multiple copies. Put one in your corporate minute book and another with the file for the loan or other related activity.
Frequently Asked Questions
What is a borrowing resolution for a corporation?
A borrowing resolution for a corporation is a formal document adopted by the board of directors that authorizes the corporation to borrow money. It typically specifies the loan amount, the lender, and the terms and conditions of the borrowing. The resolution also designates which corporate officers are authorized to sign the necessary loan documents on behalf of the corporation.
Who needs to approve a corporate borrowing resolution?
A corporate borrowing resolution must be approved by the board of directors of the corporation. The resolution is adopted at a special meeting of the board, upon a motion made and seconded. This ensures that the decision to borrow funds is made collectively by the directors, as required by corporate governance procedures.
What should be included in a borrowing resolution?
A borrowing resolution should include the original principal sum to be borrowed, the name of the lender, and the terms and conditions of the loan. It may also authorize the pledging of collateral, the opening or maintaining of deposit accounts, and any other terms required by the lender. Additionally, it should identify the corporate officers authorized to sign the promissory notes and other agreements.
Which officers are authorized to sign loan documents under a borrowing resolution?
The borrowing resolution typically authorizes the corporation's President to sign promissory notes, certifications of indebtedness, warranties, bonds, indentures, and other agreements required by the lender. The resolution may also include provisions for attestation by the Secretary or other officers. The specific officers authorized are named in the resolution itself.
Is a borrowing resolution required by banks for a corporate loan?
Yes, banks generally require a borrowing resolution before extending a loan to a corporation. The resolution serves as evidence that the corporation has the authority to borrow funds and that the individuals signing the loan documents are duly authorized. Without it, the bank may not be able to enforce the loan agreement.
What is the difference between a borrowing resolution and a loan agreement?
A borrowing resolution is an internal corporate document that authorizes the borrowing and designates signatories, while a loan agreement is a contract between the corporation and the lender that outlines the terms of the loan. The resolution is adopted by the board of directors, whereas the loan agreement is signed by the authorized officers. Both are typically required for a corporate loan.
Can a borrowing resolution be amended or revoked?
A borrowing resolution can be amended or revoked by the board of directors, typically by adopting a new resolution. However, any amendment or revocation may not affect existing obligations to the lender without the lender's consent. It is important to follow the corporation's bylaws and applicable state law when making changes.
What happens if a corporation borrows without a borrowing resolution?
If a corporation borrows without a borrowing resolution, the loan may be considered unauthorized, and the officers who signed the loan documents may be held personally liable. Additionally, the lender may face difficulties enforcing the loan. To avoid such issues, corporations should ensure that a proper borrowing resolution is adopted before entering into any loan agreement.
How is a borrowing resolution adopted?
A borrowing resolution is adopted at a special meeting of the board of directors, upon a motion made and seconded. The resolution is then recorded in the minutes of the meeting. It should be dated and signed by the Secretary of the Corporation and attested by the President.
What is the role of the Secretary in a borrowing resolution?
The Secretary of the Corporation is responsible for recording the borrowing resolution in the corporate minutes and signing it to certify its adoption. The Secretary's signature, along with the President's attestation, provides official documentation of the board's decision. This helps ensure the resolution is properly executed and can be presented to the lender as needed.
