How to Draft LLC Certificate for SBA Loan (EIDL) without an Attorney

Small Business Administration (SBA) enhances COVID Economic Injury Disaster Loan (EIDL) Program by increasing the loan cap to $2 million to aid small businesses facing challenges from the delta variant of COVID-19.

If you are facing difficulties to pay your business debts, or deferred payments are worrying you, or you have started your business in this pandemic and to get it off the ground, you need financial assistance, the SBA EIDL program can help you.

Loan funds can be used for normal operating expenses and working capital, including purchasing equipment, payroll, rent/mortgage, paying debt, prepaying commercial debt, and making payments on federal business debt.

Eligible small businesses, agricultural businesses, and nonprofits can apply for this loan in all U.S. states and territories. Once your EIDL is approved by the SBA, you need legal proof for your business’s existence.

If your business is registered as an LLC and your EIDL has been approved, you will get an email from the SBA agent requesting an LLC certificate. Anticipating some paperwork and seeing legal terms, you may start panicking.

Well, you do not need to hire an attorney to get this document ready; you can make this certificate on your own and send it to the SBA. This article will tell you how!

What is an LLC Certificate?

An LLC certificate is a legal document signed by all the members of a Limited Liability Company (LLC) containing the following information:

• A statement of LLC official meeting
• A statement about the loan authorization and LLC agreement on the SBA loan. This statement also specifies the loan amount
• A statement authorizing a member or members by their name and title to sign the SBA loan closing documents. The statement must be signed and dated by at least one LLC member or managing member or manager.

Is Certificate of LLC and Certificate of Organization the Same?

No, the certificate of organization is the official document of an LLC formation. It is filled with the secretary of the state, which states that the LLC was duly formed in the filing state and officially recognized as a legal entity.

While a certificate of LLC simply signed a document stating that the LLC members held a meeting, agreed on an SBA loan, and authorized one of their members/managers to sign the loan closing document. You do not have to file this certificate with the secretary of the state.

Who is Required to Submit LLC certificates to SBA?

On the last page of the Loan Authorization and Agreement document, SBA clearly mentioned that:

“Borrower shall, within the 180 days of receiving any disbursement of this loan, submit the appropriate SBA certificate and/or resolution to the U.S Small Business Administration, Office of Disaster Assistance, 14925 Kingsport Rd, Fort Worth, TX. 76155.”

You can find this information under the heading “Resolution of Board of Directors”. According to the statement mentioned above, all borrowers who are LLCs or corporations should send the SBA certificate, aka LLC certificate and resolution, respectively, to SBA.

However, independent contractors and sole proprietors are not required to submit such documents.

Why does the SBA require an LLC Certificate?

Through the LLC certificate, the SBA wants written proof that the LLC members sat down together to discuss the SBA loan, its terms, and the total loan amount, etc. After the discussion, the members have come to an agreement on the loan issue.

LLC certificate is the equivalent of corporate resolution documentation of the board of directors of a corporation where all the corporation members officially meet to discuss the issues concerning their corporation and document their decision.

Since registered entities such as LLCs and corporations can not perform business transactions without authorizing a member of the company or corporation, SBA requires the information of the authorized person on behalf of your business in the form of LLC certificates.

So whether you have a single-member LLC or multi-member LLC, you need to submit an LLC certificate to SBA.
What Must be Included in Certificates of LLC for SBA Loan? (LLC Certificate Draft)

The following are the important components of the LLC certificate for EIDL.

Title

Certificate of LLC of (Type your Company Name)

Paragraph 1

In this paragraph, you must specify the date and place of the LLC managing members’ meeting. You can use the following lines:

“We, the undersigned managing members of (LLC Name), give our approval and consent that our operational resolution was made on (Date) at (LLC Registered Address)”.

Note: It is important that the date you put in for your meeting has to be a date after payment is received.

Paragraph 2

This paragraph tells that all the members were in agreement about the resolution. You can state this as”

“We, the managing members of the (LLC Name), hereby consent to the adoption of this agreement as if it was adopted at our regularly scheduled meeting. In accordance with State law and bylaws of (LLC Name), we voted unanimously on behalf of every member in good standing for its approval to make you aware that:”

Paragraph 3

Here you are required to specify the loan amount you received under the COVID-19 EIDL program with reference to your loan application. This is how you can state this information:

(LLC Name) accepts the SBA loan under Covid-19 EIDL Program for the amount of (exact loan amount in dollars) through SBA Loan Application Number (———–) to use the funds for LLC operational expenses during the Covid-19 economic distress.

Paragraph 4

This paragraph tells about the authorized person designated to do the loan transaction on LLC’s behalf. State this information using the following lines:

In addition, (LLC Name) appoints (Member’s/ Manager’s / Managing Member’s Name), the (state the role of the authorized person in your LLC) as the authorized signatory of the SBA loan with Application Number (———–).

Paragraph 5

Inform that the managing members are authorized to arrange the LLC meeting and decide for the company in any way they see fit by stating:

“The managing members of (LLC Name) are authorized to act on behalf of the company to carry out LLC meetings and pass the resolution”.

Signature Section

Here you include the full name, signature, and the meeting date of all the managing members of your LLC.

Final Words

We hope that the information mentioned above has helped you draft your LLC certificate for the SBA loan, and you are good to go for the submission.