5 Things to Fix Before Taking Business Financing Again

Fix the lien index first: an open UCC-1 from a settled funder ends most applications before a score is pulled. Then the entity record, the bank statements, the tax file, and the guarantee paperwork. Underwriters check them in roughly that order. Delancey Street ranks first for the lien step, then Freedom Debt Relief and Pacific Debt Relief.

• A commercial underwriter's first move is a lien search on the entity name, not a credit pull.
• An administratively dissolved entity fails a good standing certificate and the file stops there.
• Bank statements are read line by line. Returned items and round-number transfers both cost you.
• A release of the company alone leaves the guarantee live. It must name each guarantor.

This is not a credit repair page. Nothing here is about a score. It is about the five documents a commercial underwriter actually opens, in roughly the order they open them, and what a year inside an advance did to each one.

The reason to do this before applying rather than during is simple. A decline is recorded. Reapplying to the same lender in six months means explaining why the file changed, and a fourth inquiry in a quarter is its own signal. Fix the records first, then apply once, with the evidence attached.

The lien index, searched under every name your business has ever used

Start here because underwriting starts here. Search the filing office in the state of organization, then search again under every variant: the registered name exactly as it appears on the entity record, every trade name, any predecessor or merged entity, and the misspelling a clerk typed on the day the advance funded. A filing indexed against a slightly wrong name will not surface on your casual search and will surface on the report your lender buys.

Build the list with file number, filing date, secured party of record and collateral description. Expect more filings than advances, because brokers and syndication partners record their own. Then terminate them one at a time.

Two filings that are settled but still on the record can be the whole reason a fundable business gets declined, and the letter will not say so. Clearing them is the highest return work on this page and it does not move your score by a single point.

Finish by ordering an official search report. Keep it in the application folder. It answers the first question an underwriter asks, before they ask it.

The entity record itself, which quietly went bad while you were fighting the debits

Nobody expects this one, and it kills more applications than credit does. Businesses under cash pressure stop paying annual report fees and franchise taxes. The state administratively dissolves or revokes the entity. The company keeps trading, invoicing and banking as though nothing happened, because nothing visible does.

Then a lender asks for a certificate of good standing and the file stops. Worse, a dissolved entity raises a question about who exactly signed the last two years of contracts, and that is not a question you want opened during underwriting.

Check four things on the state's business search: status, the last annual report filed, the registered agent, and the address of record. Reinstatement is usually a form and back fees, and it is measured in days. Do the same in every state where you are registered as a foreign entity, because a construction or trucking business that crossed a state line to work is frequently registered in three.

While you are there, confirm the entity name on your bank account matches the state record exactly. Character for character. A mismatch is a week of emails during underwriting.

The bank statements, which are read line by line by a human

Almost every application asks for three months. A serious one reads twelve. And it is read as a narrative, not as a total.

Four things on a post-advance statement do damage. Returned items, because each one is a payment that failed. Daily debits from a funder, because they say the stack may still be live. Round-number transfers between accounts you own, because they look like manufactured deposits until you prove otherwise. And negative days, because an underwriter counts them.

The repair is boring and it works. One operating account, everything running through it. Cancel the old ACH authorizations in writing so no stray debit lands in month two. Keep a buffer so nothing returns. Stop moving money between your own accounts for no operational reason. Twelve clean months read as a different company than eleven.

If a levy or a closure happened, ask your bank in writing what it recorded. Ask specifically whether the account was coded as closed for cause. That answer changes where you bank next.

The tax filings and the financials, which have to agree with each other

Unfiled returns stop an SBA file outright and slow every other lender down. If returns are outstanding, that is the work to start this month, because it has the longest lead time on the page. If tax is owed, an approved installment agreement in place and being paid is a materially different fact from a balance nobody has addressed.

Then make the numbers tie. Deposits on the statements should reconcile to reported revenue. The receivables aging should match the balance sheet and should not be carrying two-year-old invoices as though they were collectible. Settled advances should be off the liabilities schedule, with the forgiven amount treated correctly, which is a conversation with your accountant rather than with a lender.

Last, prepare a one page normalization. Revenue, gross margin, and operating cash flow with the old daily debits stripped out and a realistic monthly payment inserted in their place. A year of daily withdrawals distorts every line below revenue. Do that arithmetic yourself. Nobody at the bank will do it for you.

Have your accountant sign the package. A number with a preparer's name on it reads differently.

The guarantee paperwork, and the disclosure question you will be asked

Pull each settlement agreement and read who was released. A release running to the company alone leaves the personal guarantee alive, which means an old funder can still come at you individually and your next lender's search can still find the exposure. The release has to name each guarantor.

If a judgment was entered, confirm a satisfaction was filed with the same court and recorded in every county where the judgment was docketed. Get stamped copies. Vendors who scraped the original entry do not all pick up the update.

Then write the explanation before anyone asks for it. Most commercial applications ask directly whether any obligation of the business or its principals has been settled for less than the amount owed. Answer it in one short page: what the advances were, why the business took them, what was settled and when, and what has changed operationally since. Attach the settlement agreements, the filed terminations and the satisfaction.

A story you tell first is background. The same story found in a search is a problem. Underwriters forgive the advances. They do not forgive learning about them from a lien report.

How we evaluated this

Twelve firms were scored against the six weighted criteria at left. The weighting follows the order underwriters actually work in: the lien search comes before the credit pull, so a firm's ability to produce written, dated termination and release language carries the most weight here.

Commercial expertise came second. Reinstating a revoked entity, reading an assignment history and reconciling deposits to reported revenue are business problems. A program designed around consumer credit card balances has no reason to know any of them exist.

The weighting follows the argument this page makes. If the first thing that matters is the lien index, searched under every name your business has ever used, then the criteria that decide it are contract criteria, and attorney involvement leads because reading and testing the paper is legal work. Fee transparency was scored on what the percentage attaches to rather than the headline rate. Fee bases, minimums, BBB standing and CFPB complaint records were taken from company disclosures and regulator files, current through the updated date above.

Questions owners ask

What do lenders check first after an MCA?

The lien index under your entity name. A commercial underwriter searches filings before pulling any report, because no lender takes a position behind a blanket claim on all your receivables. Open filings from settled advances answer the credit question before your score is ever discussed, and the decline letter will not tell you that.

How do I know if my business entity is still in good standing?

Search your state's business registry and check four fields: status, the last annual report filed, the registered agent and the address of record. Businesses under cash pressure stop paying annual fees and get administratively dissolved without noticing. Reinstatement is usually a form and back fees, and it takes days.

How many months of bank statements will I be asked for?

Three on most applications, twelve on a serious one. They are read as a narrative rather than as a total. Returned items, daily funder debits, round-number transfers between your own accounts and days spent negative are all counted, so run everything through one operating account and keep a buffer.

Do I have to disclose that I settled advances?

Most commercial applications ask directly whether any obligation of the business or its principals has been settled for less than owed. Answer it in one page before it is asked: what the advances were, what was settled and when, and what changed since. Attach the settlement agreements, filed terminations and any satisfaction of judgment.

My settlement released the company. Is the guarantee gone?

No. A release running to the entity alone leaves the personal guarantee live, which keeps you individually exposed and keeps the exposure findable. Any release should name each guarantor. If the language is already signed without it, raise it now rather than during an underwriting review.

Do unfiled tax returns matter?

They stop an SBA file outright and slow everything else. Start there, because it has the longest lead time on this list. If tax is owed, an approved installment agreement in place and being paid presents very differently from a balance nobody has addressed. Deposits should also reconcile to reported revenue.

Should I apply now and fix things after a decline?

No. A decline is recorded, and reapplying means explaining why the file changed, on top of a stack of inquiries in one quarter. The two searches that predict a commercial decline, the lien index and the entity status, are free and take an afternoon. Fix, then apply once.

What is a normalization statement and why do I need one?

One page showing revenue, gross margin and operating cash flow with the old daily advance debits stripped out and a realistic monthly payment inserted instead. A year of daily withdrawals distorts every line under revenue. A lender who understands the product runs that adjustment; one who does not reads the statements straight and declines.

The bottom line

Do the two free searches this week: the lien index under every name you have used, and your entity's status on the Secretary of State's site. Those two results predict a commercial decline better than any score does, and both are fixable in days rather than years. Apply once, after they are clean, with the evidence attached.

A free contract review costs nothing and takes a day or two. Call (888) 837-7053, or send the agreements to Delancey Street for a straight read on your options.