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Resolution to Borrow from a Designated Bank

Corporate Resolution Sample

A corporate resolution that authorizes borrowing from a designated bank helps establish the relationship that members (LLC) or Board of Directors (Corporation) have with the company's banking needs.

Like a corporate resolution authorizing borrowing on a line of credit, a meeting and vote are conducted among members or Board of Directors. This acknowledges the company is allowed to go into debt after borrowing from a designated bank.

If the vote does not pass, a corporate resolution can't be established to borrow from a bank. As a result, the company will be unable to borrow any money.

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Resolution to Borrow from a Designated Bank

(Text Only Version)

COMPANY NAME

Resolution to Borrow from a Designated Bank

RESOLVED, that the MEMBER/DIRECTOR TITLE of the Corporation is authorized, for the account of this Corporation, and on such terms and conditions as he/she/they may deem proper, to borrow from LENDER (Financial Institution) sums of money; and to sign, execute, and endorse all such documents as may be required by said bank to evidence such indebtedness; to discount or rediscount with said bank any of the bills receivable owned by this Corporation; to apply for and obtain from said bank letters of credit, and to execute agreements to secure said bank in connection therewith, to pledge and/or mortgage any moneys on deposit or any moneys otherwise in the possession of said band, and/or any bonds, stocks, receivables, or other property of this Corporation, to secure the payment of any indebtedness, liability, or obligation of this Corporation to said bank whether now due or to become due and whether existing or hereafter incurred, to withdraw and/or substitute any property held at any time by said bank as collateral, and to sign and execute trust receipts for the withdrawal of same when required; and generally to do and perform all acts and sign all agreements, obligations, pledges, and/or other instruments necessary or required by said bank.

The undersigned hereby certifies that he/she is the duly elected and qualified Secretary and the custodian of the books and records and seal of COMPANY NAME,a corporation duly formed pursuant to the laws of the state of YOUR STATE and that the foregoing is a true record of a resolution duly adopted at a meeting of the DIRECTORS/MEMBERS and that said meeting was held in accordance with state law and the Bylaws of the above-named Corporation on MEETING DATE,and that said resolution is now in full force and effect without modification or rescission.

IN WITNESS WHEREOF, I have executed my name as Secretary and have hereunto affixed the corporate seal of the above-named Corporation this DAY OF THE WEEK, CURRENT MONTH of CURRENT YEAR.

SECRETARY NAME, Secretary


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What kind of information do I need to create a resolution to borrow from a designated bank?

The purpose of a resolution to borrow from a designated bank is to document the agreement made by the board of directors to borrow funds on behalf of the business. When you create a resolution to borrow from a designated bank, you need to include the following information:

  1. The legal name of the corporation
  2. Name of the authorized member/director
  3. Name of the lender from whom they will borrow sums of money
  4. Signature of authorized member/director that will execute and endorse all such documents required by said bank as well as agreement to perform all acts and sign all agreements and obligations required by said bank
  5. The state where the business is formed
  6. Information about the directors/members
  7. The date on which the agreement to carry out said resolution is made
  8. The current day, month, and year when the agreement is signed
  9. Signature and date signed

This resolution must document the actions that are authorized to be taken by the business and should be stored along with your corporate records.

Frequently Asked Questions

A borrowing resolution is a legally binding document that approves a corporation's management or executives to borrow funds on behalf of the corporation. The company's board generally approves it.

The approval process involves proposing the resolution during a formally convened board or shareholder meeting, followed by discussions and a voting process. A majority vote is usually required to pass the resolution. This resolution specifically outlines the reasons for the borrowing, the maximum amount that can be borrowed, and sometimes the loan repayment terms.

A borrowing resolution has a significant influence on borrowing terms. The resolution outlines the limits and conditions of the borrowing, including the maximum amount that can be borrowed and the repayment terms.

These stipulations can serve as guidelines during the negotiation process with potential lenders, establishing a structured framework within which the company agrees to borrow and repay the loan. The resolution ensures that the borrowing aligns with the corporation's financial health and strategic objectives.

The legal requirements for a borrowing resolution can vary based on jurisdiction and the specific corporate structure. Typically, it requires a majority vote from the board of directors or shareholders to pass.

Additionally, the resolution and its approval must be appropriately documented, usually within the meeting minutes, to ensure transparency and legality. If the company is publicly traded, there may be additional disclosure requirements to inform shareholders and regulators about the corporation's borrowing activities. Consultation with a legal professional is advisable to meet all legal requirements.

Failure to pass a borrowing resolution can have severe consequences for a corporation. Without the authority to borrow funds, the corporation may be unable to pursue specific business opportunities, make investments, or fulfill financial obligations.

This could potentially stifle business growth and negatively affect the corporation's financial health. Furthermore, if the corporation borrows money without a correctly passed borrowing resolution, it could result in illegal activities, potentially exposing the directors to personal liability and damaging the corporation's reputation. This highlights the crucial role of borrowing resolutions in maintaining a corporation's financial integrity and compliance.

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