Legal Question in Business Law in California

Re: Personal loan to C corp

Corporations do NOT have partners. There are shareholders, officers and directors.

You should hire an attorney to advise you regarding the operation of your corporation. I am available for consultation by email (and I teach a class on corporations, by the way).

Short answer is that the disinterested directors need to approve the loan and its terms.

Re: Personal loan to C corp

Get personal guarantees.

Re: Personal loan to C corp

I think what Mr. Stone is suggesting is that you get a personal guarantee from the partner(s) for this loan. The reason being, if the company becomes insolvent or goes bankrupt your loan may not be paid back leaving you on the hook personally for the loan. If you have personal guarantees from the partner(s) you have a better chance of collecting since you can attempt to recover from them personally and not just the corporation.

Regarding your question, I'm assuming you're one of the two "partners" (it wasn't perfectly clear from your question). You certainly want the other partner to sign since he will be obligating the company to repay the loan. I would recommend you both sign the paperwork - you as creditor and the other partner signing on behalf of the company as debtor. I would also recommend you have an attorney review the agreement/paperwork since there will likely be pitfalls you or your partner won't see in this arrangement. It sounds like it is already more complicated than you expected.