Out of State Borrower

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    We have a new loan secured by a UCC filing for a Borrower (LLC) formed in Oregon, with a principal office in Washington DC. The entity does not do business in California. We are a Commercial Bank located in California. the LLC is not registered in California, however, they also do not do business in California.

    The Guarantor is a corporation and is a former customer. The Guarantor is a California corporation.

    Does it pose a risk to the Bank if our Borrower is not registered to do business in California?


    This would be a legal question and best answered by an Attorney in the State of California. Putting on my BSA/AML compliance hat – I would have to ask why they would do a loan in CA since they do not operate in your state. That would be the “big” red flag IMO.

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