Who can sign this resolution?

Typically the manager, managing member, or an officer authorized by the operating agreement signs. Ensure the resolution follows the entity’s voting rules to avoid procedural defects.

Is notarization required?

Not generally required for internal corporate resolutions, but banks or third parties may ask for a notarized or certified copy; check state or bank requirements in advance.

Can I use electronic signatures?

Yes. Electronic signatures meet ESIGN and UETA standards when intent, consent, attribution, and record retention are present. Use platforms that capture an audit trail and secure authentication.

How do I avoid tax problems?

Document repayment terms, interest rates, and accounting treatment clearly. Treating an advance as a loan with market terms reduces risk of recharacterization as equity or contribution.

How to revoke or amend the resolution?

Follow the same approval process used to adopt it: a subsequent resolution, recorded in the minute book, should explicitly revoke or amend prior authorizations.

What records should I keep?

Retain the signed resolution, promissory note, payment records, and accounting entries. Follow tax and industry retention rules, and keep documents accessible for audits.

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Resolution to Borrow Capital from Member

Resolution to Borrow Capital from Member

This template is fully customizable. Edit the text, fill out the fields, and send it for signature. Give it a try!

What this Resolution Is and when it’s used

A Resolution to Borrow Capital from Member is a formal LLC or corporate record that documents the business entity’s authorization to accept a capital loan or advance from a member or shareholder. The resolution typically records the lender member, the authorized principal amount, any repayment terms or interest, whether the advance changes capital account balances, and the officer or manager authorized to execute related loan documents. Organizations use this resolution to evidence corporate authority, satisfy banks or auditors, and maintain clear corporate records for governance and tax purposes.

Why adopting a resolution matters for member loans

A written resolution creates clear corporate authority, reduces disputes about member advances, and provides evidence for lenders, banks, and auditors. It helps preserve limited liability by documenting that the entity — not the individual — authorized the borrowing and sets repayment expectations to avoid recharacterization as taxable contributions.

Who typically prepares and signs this resolution

Common users and preparers include in-house counsel, company managers, and accounting staff responsible for corporate records.

The resolution is retained with the entity’s minutes and financial records to support governance, bank transactions, and tax reporting.

Primary signer roles and typical document owners

Managing Member

A managing member or manager often prepares or signs the resolution. They approve the borrowing, confirm repayment terms, and ensure the loan is recorded in accounting and corporate minutes to preserve limited liability and comply with operating agreement provisions.

Company Secretary

The company secretary or corporate records custodian adds the resolution to the minute book, records voting results, and ensures that supporting documents (loan agreement, promissory note) are attached for audit and tax review.

Core elements to include in a professional resolution

A complete resolution is concise but specific; include authority, amounts, terms, signatories, and recordkeeping instructions so third parties and auditors can verify the borrowing.

Authorized Amount

State the maximum principal amount the entity may borrow from the specified member and whether further draws require separate approval.

Lender Identification

Identify the lending member by full legal name and membership interest so the source of funds is clear for tax and governance records.

Repayment Terms

Specify interest rate, repayment schedule, maturity date, prepayment rights, and any security or guarantees associated with the advance.

Authorization Clause

Name the officer or manager authorized to execute loan agreements, promissory notes, and related documents on behalf of the entity.

Accounting Treatment

Direct the finance function how to record the advance (loan receivable/payable, capital account adjustment) for accurate tax and financial reporting.

Recordkeeping

Instruct that the resolution and supporting documents be filed in the minute book and retained per the company’s document retention policy.

Required fields to capture in the resolution

Entity Name: Full legal entity name

Member Name: Lender member full name

Principal Amount: Specified loan amount

Interest Rate: APR or fixed rate

Authorized Signer: Officer or manager name

Effective Date: Execution date MM/DD/YYYY

Step-by-step: completing the resolution

Follow these sequential steps to prepare, approve, and record a member loan resolution correctly.

01

Draft Resolution: Enter entity, member, amount, and terms clearly.
02

Obtain Approval: Follow operating agreement voting rules for member consent.
03

Execute Documents: Have authorized signer sign the resolution and loan documents.
04

Record and File: File resolution in minutes and update accounting records.

How to configure an online workflow for this resolution

Design a simple eSignature workflow with required fields, signer order, and authentication to streamline execution and recordkeeping.

Field	Configuration
Signer Order	Member first \| Manager second
Authentication	Email + SMS code for signer verification
Required Fields	Names, amount, dates, signature blocks
Retention	Auto-archive signed PDF to corporate folder

Where to send or file the signed resolution

After execution, distribute copies to stakeholders and file the original with corporate records and accounting.

Corporate Records: Place the signed original in the company minute book.
Accounting: Provide copy for bookkeeping and ledger entries.
Lender Member: Send an executed copy to the lending member.
Bank or Lender: Provide certified copy if bank requires proof of authority.

Digital signing and eSubmission considerations

Choose an eSignature platform that supports secure authentication, audit trails, and long-term document access.

Authentication: Email, SMS, or two-factor
Audit Trail: IP, timestamps, and action logs
Integrations: CRM and cloud storage

Key timelines and expected processing steps

Track approval and filing dates to meet corporate governance rules and avoid tax or accounting issues.

Board or Member Vote:

Complete per operating agreement before executing loan documents.

Execution Date:

Signer dates determine effective date for accounting purposes.

Accounting Entry:

Record advance on the books within the same reporting period.

Tax Reporting:

Include interest paid in the correct tax year for Form 1099 reporting if required.

Retention Start:

Retention begins on execution date or date of record creation.

Common errors to avoid when preparing this resolution

Omitting clear authorization language or signer name, which can create banking delays or governance disputes and undermine limited liability protections.
Failing to record the resolution in the minute book, leaving no documentary evidence of approval for auditors or third parties.
Using vague repayment or interest terms that risk recharacterization as capital contribution or gift for tax purposes.
Neglecting to follow operating agreement voting thresholds, which can render the action procedurally defective.

Legal and financial risks of an incorrect or missing resolution

Tax Recharacterization: Loan may be treated as capital contribution for tax purposes

Loss of Liability Shield: Improper documentation can blur corporate separation

Bank Refusal: Lenders may decline transactions without formal authority

Fiduciary Claims: Members may allege breach of duty or conflicts

Reporting Errors: Incorrect 1099 treatment or omitted interest reporting

Operational Delays: Missing approvals can delay funding and projects

Comparing eSignature vendors for executing resolutions

Basic price, trial availability, bulk send, audit trails, HIPAA support, and envelope caps influence platform choice for executing and storing signed resolutions.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	Yes, 7-day free trial	Varies by vendor	Varies by vendor	Varies by vendor	Varies by vendor
Bulk Send	Yes (Business Premium)	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes (BAA available)	Yes	Yes	No	No
Envelope Cap	No envelope cap	100 envelopes/user/year cap	Varies	Varies	Varies

Frequently asked questions about member loan resolutions

Answers to common questions about authority, signatures, eSigning, recordkeeping, and revocation when borrowing capital from a member.

Need help? Contact support

Who can sign this resolution?
Typically the manager, managing member, or an officer authorized by the operating agreement signs. Ensure the resolution follows the entity’s voting rules to avoid procedural defects.
Is notarization required?
Not generally required for internal corporate resolutions, but banks or third parties may ask for a notarized or certified copy; check state or bank requirements in advance.
Can I use electronic signatures?
Yes. Electronic signatures meet ESIGN and UETA standards when intent, consent, attribution, and record retention are present. Use platforms that capture an audit trail and secure authentication.
How do I avoid tax problems?
Document repayment terms, interest rates, and accounting treatment clearly. Treating an advance as a loan with market terms reduces risk of recharacterization as equity or contribution.
How to revoke or amend the resolution?
Follow the same approval process used to adopt it: a subsequent resolution, recorded in the minute book, should explicitly revoke or amend prior authorizations.
What records should I keep?
Retain the signed resolution, promissory note, payment records, and accounting entries. Follow tax and industry retention rules, and keep documents accessible for audits.

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