Does forming an LLC protect me from personal liability on the loan?

No. The LLC can offer liability protection for other creditors, but the loan itself carries a personal guaranty from qualifying owners regardless of entity structure.

Is a DSCR loan ever truly non-recourse with no guaranty at all?

Not on Silt's product. What is sometimes marketed as non-recourse describes the ordinary-default pattern; a guaranty with carve-outs still exists underneath it.

If I own 20% of the LLC, do I still have to sign?

Generally no if you are below the 25% ownership threshold, though a lender can request additional signatures in unusual ownership situations.

Can the guaranty be negotiated or removed?

Guaranty terms are set by the lender's program, not typically negotiated deal by deal; ask the desk directly about what is fixed versus flexible.

Should I have a lawyer review the guaranty before closing?

Yes. It is a binding personal obligation separate from the note, and an attorney can explain exactly what it exposes you to under your state's law.

LESSON 3 OF 66 MIN READ

What am I actually signing when I give a personal guaranty?

Even though a DSCR loan closes in an LLC, every member who owns 25% or more of that LLC personally guarantees repayment, which means the lender can pursue you individually if the entity defaults and the collateral does not cover the debt. The guaranty is separate from the note and mortgage, and it typically survives even if the entity is dissolved. So-called non-recourse carve-out loans limit that personal exposure to a defined list of triggering events — commonly called bad-boy carve-outs — rather than eliminating personal liability altogether, and the exact carve-out list varies by lender and by loan.

THE NUMBERS

Minimum DSCR	0.75 (0.75–0.99 prices at +62.5 bps, 70% LTV cap)
Maximum LTV	80% purchase or rate-and-term · 75% cash-out
FICO floor	660 (below that the desk does not lend)
Loan size	$100K – $3M single · $10M portfolio
Reserves	6 months PITIA · 12 months on a portfolio
Prepay options	5-4-3-2-1 par · 3-2-1 +25 bps · 1-yr +50 bps · none +87.5 bps
Typical days to close	21–30 days from a signed term sheet
Rate sheet	Silt Rate Desk — Market Composite Sept 2026 · effective 2026-09-01

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

What does the guaranty document actually say?

A personal guaranty is a separate contract, signed alongside the note and mortgage, in which you agree that if the entity fails to pay and the lender cannot recover the full debt from selling the property, you personally owe the shortfall. It is not a formality — it is an independent obligation the lender can enforce against your personal assets, income and credit, and it does not go away automatically if you later sell your membership interest in the LLC. Read the guaranty as carefully as the note itself, and have your attorney review the exact language before signing, since wording differs by lender.

Who has to sign it?

On Silt's structure, any individual owning 25% or more of the borrowing entity signs the guaranty; owners below that threshold generally do not, though a lender can ask for additional signatures where the ownership picture is unusual. In a single-member LLC that is simply the one owner. In a multi-member structure it can be two, three or more people, each guaranteeing the full loan rather than a pro-rata share — a point worth discussing with partners before you all sign, since one member's default exposure is not limited to their percentage stake.

What is a bad-boy carve-out?

A carve-out is a specific act — such as fraud, waste of the property, unauthorised transfer of title, filing bankruptcy in bad faith, or misapplying insurance or condemnation proceeds — that converts an otherwise limited guaranty into full personal liability for the entire loan. The name comes from the idea that the guaranty is meant to be largely passive unless the borrower does something the lender considers deliberately harmful. The exact list of carve-out events, and how broadly each is worded, differs from lender to lender, so it is worth reading that section of the guaranty line by line rather than assuming it matches what you have seen elsewhere.

What does 'non-recourse at pattern level' actually mean?

In ordinary use, a DSCR loan is treated by many lenders as non-recourse for routine default — meaning if the borrower simply cannot pay and walks away without any carve-out event, the lender's remedy is generally limited to foreclosing on the property rather than chasing every other personal asset. 'Non-recourse at pattern level' describes that default pattern, not a guarantee written into the note that removes personal liability entirely; the personal guaranty and its carve-outs still exist underneath it and can be triggered by the specific acts listed in the document. Treat any description of a loan as 'non-recourse' as shorthand for the ordinary-default pattern, and read the actual guaranty for what still creates personal exposure.

Does the guaranty change with the prepayment structure or loan terms?

No — the guaranty is tied to who owns the entity and how much of it they own, not to the prepayment penalty you select from the menu or whether the loan is fixed or interest-only. Choosing a shorter prepayment term or a higher rate does not reduce or remove personal guaranty exposure, and there is no version of Silt's DSCR product that closes without a guaranty from qualifying owners. If limiting personal exposure is a priority, the conversation to have is with an attorney about entity structure and carve-out language, not about loan terms.

What happens practically if the loan defaults?

The lender's first remedy is the collateral itself — foreclosure and sale of the property — and the guaranty becomes relevant mainly if that sale does not cover the full debt, or if a carve-out event occurred. Guaranty claims and their consequences for credit, wages or other assets vary by state law and by how the guaranty is drafted, which is exactly the kind of question to take to an attorney rather than assume from general market practice. Nothing here should be read as advice on what would happen in your specific state or situation.

Guaranty basics at a glance

Who signs	Every owner with 25% or more of the entity
Extent of each guaranty	Full loan amount, not a pro-rata share, per signer
Ordinary default	Recovery generally limited to the collateral — the 'pattern' non-recourse case
Bad-boy carve-out events	Fraud, waste, unauthorised transfer, bad-faith bankruptcy, misapplied proceeds
Effect of a carve-out event	Converts to full personal liability for the loan
Tied to prepayment menu?	No — guaranty exposure is unrelated to prepay choice
Survives sale of membership interest?	Generally yes unless the lender releases you in writing
Where the exact language lives	The guaranty document itself — read separately from the note

This describes the general shape of a personal guaranty on a DSCR loan. Exact carve-out wording and enforcement vary by lender and by state law — have an attorney review the actual document before you sign.

WHAT WE NEED FROM YOU

The guaranty itself. A standalone document signed alongside the note and security instrument.
Ownership/entity schedule. Establishes who owns 25% or more and therefore must sign.
Government-issued ID for each guarantor. Standard closing identification for every signer.
Credit authorization. Each guarantor's credit is pulled and priced individually.
Business-purpose affidavit. Signed alongside the guaranty confirming investment use of the property.

FREQUENT QUESTIONS

Does forming an LLC protect me from personal liability on the loan?: No. The LLC can offer liability protection for other creditors, but the loan itself carries a personal guaranty from qualifying owners regardless of entity structure.
Is a DSCR loan ever truly non-recourse with no guaranty at all?: Not on Silt's product. What is sometimes marketed as non-recourse describes the ordinary-default pattern; a guaranty with carve-outs still exists underneath it.
If I own 20% of the LLC, do I still have to sign?: Generally no if you are below the 25% ownership threshold, though a lender can request additional signatures in unusual ownership situations.
Can the guaranty be negotiated or removed?: Guaranty terms are set by the lender's program, not typically negotiated deal by deal; ask the desk directly about what is fixed versus flexible.
Should I have a lawyer review the guaranty before closing?: Yes. It is a binding personal obligation separate from the note, and an attorney can explain exactly what it exposes you to under your state's law.

Apply

Multi-member LLCs and 25%+ owners LLC entity vesting on a DSCR loan Glossary All answers