Legal Question in Business Law in California

Well, it could become an issue as to why the lender thought the business was an LLC at the time the contract was drawn up, but I think that if the business were a partnership at the time the loan proceeds were taken, the fact that the loan papers referred to the borrower as an LLC will not prevent you from being liable personally. The legal theory would be that you saw and signed the papers containing the mistake, yet nevertheless accepted the loan proceeds for your partnership and received the benefits of the loan. It's possible that the corporation might be or become jointly liable, but from the original lender's standpoint, it doesn't have to sue the corporation (although it might add the corporation as a co-defendant). Ultimately, the corporation's potential liability either to the lender directly or to reimburse you for damages the lender collects from you will probably depend upon the directness and degree of benefit the corporation received from the loan.