{"data":{"id":"us-tn/tenn.-code-ann.-48-242-101","jurisdiction":"us-tn","citation":"Tenn. Code Ann. § 48-242-101","heading":"Loans, guarantees and suretyship","body":"(a) Prerequisites. Unless otherwise provided in chapters 201-248 of this title or the articles or operating agreement, an LLC may lend money to, guarantee an obligation of, become a surety for, or otherwise financially assist a person: (1) In the usual and regular course of business of the LLC; (2) With, or for the benefit of, a related LLC, an organization in which the LLC has a financial interest, an organization with which the LLC has a business relationship, or an organization to which the LLC has the power to make donations; or (3) With, or for the benefit of, a manager or other employee of the LLC or a subsidiary, including a manager or employee who is a member but not a governor of the LLC or a subsidiary, and may reasonably be expected, in the judgment of the body giving the requisite approval, to benefit the LLC. In the case of a loan or guarantee which is with, or for the benefit of, a person who is a governor, approval by a majority of the membership interests of disinterested members entitled to vote is required. (b) Interest and Security. A loan, guaranty, surety contract, or other financial assistance under subsection (a) may be with or without interest and may be unsecured or may be secured in any manner, including, without limitation, a grant of a security interest in a member's financial rights in the LLC. (c) Banking Authority not Granted. This section does not grant any authority to act as a bank or to carry on the business of banking. (d) Requisite Approval. (1) Except as otherwise provided in this section, for purposes of this section, \"requisite approval\" means: (A) If the LLC is board-managed, an action taken at a duly held meeting and approved by a majority of the disinterested governors or by a majority of the disinterested members at a duly held meeting of the members; or (B) If the LLC is member-managed, an action taken at a duly held meeting and approved by a majority of the voting interest of members entitled to vote which are held by disinterested persons. (2) For purposes of this section, a \"disinterested person\" is a person other than: (A) A person who receives a direct or indirect benefit from receipt of the loan or guarantee; (B) The spouse, parents, children and spouses of children, brothers and sisters, other lineal descendants and spouses of brothers and sisters of such person; or (C) Any entity in which any of the people, or any combination of the people, in subdivisions (d)(2)(A) and (B) have a material financial interest. (e) Validity of Obligation of Borrower. The fact that a loan or guarantee is made in violation of this section does not affect the borrower's liability on the loan. (f) Exception for Sales on Credit. A sale on credit in the ordinary course of business shall not be subject to the restrictions of this section. Acts 1994, ch. 868, § 1; 1995, ch. 403, §§ 66, 67.\n(B) have a material financial interest. (e) Validity of Obligation of Borrower. The fact that a loan or guarantee is made in violation of this section does not affect the borrower's liability on the loan. (f) Exception for Sales on Credit. A sale on credit in the ordinary course of business shall not be subject to the restrictions of this section. Acts 1994, ch. 868, § 1; 1995, ch. 403, §§ 66, 67.\n(a) Prerequisites. Unless otherwise provided in chapters 201-248 of this title or the articles or operating agreement, an LLC may lend money to, guarantee an obligation of, become a surety for, or otherwise financially assist a person: (1) In the usual and regular course of business of the LLC; (2) With, or for the benefit of, a related LLC, an organization in which the LLC has a financial interest, an organization with which the LLC has a business relationship, or an organization to which the LLC has the power to make donations; or (3) With, or for the benefit of, a manager or other employee of the LLC or a subsidiary, including a manager or employee who is a member but not a governor of the LLC or a subsidiary, and may reasonably be expected, in the judgment of the body giving the requisite approval, to benefit the LLC. In the case of a loan or guarantee which is with, or for the benefit of, a person who is a governor, approval by a majority of the membership interests of disinterested members entitled to vote is required.\n(1) In the usual and regular course of business of the LLC;\n(2) With, or for the benefit of, a related LLC, an organization in which the LLC has a financial interest, an organization with which the LLC has a business relationship, or an organization to which the LLC has the power to make donations; or\n(3) With, or for the benefit of, a manager or other employee of the LLC or a subsidiary, including a manager or employee who is a member but not a governor of the LLC or a subsidiary, and may reasonably be expected, in the judgment of the body giving the requisite approval, to benefit the LLC. In the case of a loan or guarantee which is with, or for the benefit of, a person who is a governor, approval by a majority of the membership interests of disinterested members entitled to vote is required.\n(b) Interest and Security. A loan, guaranty, surety contract, or other financial assistance under subsection (a) may be with or without interest and may be unsecured or may be secured in any manner, including, without limitation, a grant of a security interest in a member's financial rights in the LLC.\n(c) Banking Authority not Granted. This section does not grant any authority to act as a bank or to carry on the business of banking.\n(d) Requisite Approval. (1) Except as otherwise provided in this section, for purposes of this section, \"requisite approval\" means: (A) If the LLC is board-managed, an action taken at a duly held meeting and approved by a majority of the disinterested governors or by a majority of the disinterested members at a duly held meeting of the members; or (B) If the LLC is member-managed, an action taken at a duly held meeting and approved by a majority of the voting interest of members entitled to vote which are held by disinterested persons. (2) For purposes of this section, a \"disinterested person\" is a person other than: (A) A person who receives a direct or indirect benefit from receipt of the loan or guarantee; (B) The spouse, parents, children and spouses of children, brothers and sisters, other lineal descendants and spouses of brothers and sisters of such person; or (C) Any entity in which any of the people, or any combination of the people, in subdivisions (d)(2)(A) and (B) have a material financial interest.\nA) A person who receives a direct or indirect benefit from receipt of the loan or guarantee; (B) The spouse, parents, children and spouses of children, brothers and sisters, other lineal descendants and spouses of brothers and sisters of such person; or (C) Any entity in which any of the people, or any combination of the people, in subdivisions (d)(2)(A) and (B) have a material financial interest.\n(1) Except as otherwise provided in this section, for purposes of this section, \"requisite approval\" means: (A) If the LLC is board-managed, an action taken at a duly held meeting and approved by a majority of the disinterested governors or by a majority of the disinterested members at a duly held meeting of the members; or (B) If the LLC is member-managed, an action taken at a duly held meeting and approved by a majority of the voting interest of members entitled to vote which are held by disinterested persons.\n(A) If the LLC is board-managed, an action taken at a duly held meeting and approved by a majority of the disinterested governors or by a majority of the disinterested members at a duly held meeting of the members; or\n(B) If the LLC is member-managed, an action taken at a duly held meeting and approved by a majority of the voting interest of members entitled to vote which are held by disinterested persons.\n(2) For purposes of this section, a \"disinterested person\" is a person other than: (A) A person who receives a direct or indirect benefit from receipt of the loan or guarantee; (B) The spouse, parents, children and spouses of children, brothers and sisters, other lineal descendants and spouses of brothers and sisters of such person; or (C) Any entity in which any of the people, or any combination of the people, in subdivisions (d)(2)(A) and (B) have a material financial interest.\n(A) A person who receives a direct or indirect benefit from receipt of the loan or guarantee;\n(B) The spouse, parents, children and spouses of children, brothers and sisters, other lineal descendants and spouses of brothers and sisters of such person; or\n(C) Any entity in which any of the people, or any combination of the people, in subdivisions (d)(2)(A) and (B) have a material financial interest.\n(e) Validity of Obligation of Borrower. The fact that a loan or guarantee is made in violation of this section does not affect the borrower's liability on the loan.\n(f) Exception for Sales on Credit. A sale on credit in the ordinary course of business shall not be subject to the restrictions of this section.","path":["TN Code","Title 48","Chapter 242"],"source_url":"https://oss-data-us.vaquill.ai/v2026.08/us_tn_statutes.parquet","current_through":"2026-08-14","vintage":"open-us-law v2026.08, retrieved 2026-09-14","retrieved_at":"2026-09-14T18:32:26Z","sha256":"0431b5e684c56e28cf2ff188c8058d063e8d4c9acb9f986a0c4f6c994cce554a","source_id":"us-tn","stale":false,"prev":"us-tn/tenn.-code-ann.-48-241-111","next":"us-tn/tenn.-code-ann.-48-242-102"},"notice":"GroundRules: Original legal text. Not legal advice."}