To determine whether your business is compliant, confirm four things are current and consistent: your legal entity is active and in good standing with the state, your federal and state tax filings are up to date (or on a documented payment plan), the licenses and permits your industry requires are valid, and the name, address, and ownership on your bank statements match your formation and tax records. If those four line up, you are compliant enough to underwrite. When they conflict — a dissolved LLC still transacting, a DBA that never got registered, a tax lien no one disclosed — that is what stalls or kills a funding decision, not your revenue. This page walks through each check the way a funder actually runs it, so you can find and fix the gap before it costs you an approval.
Key takeaways
- Business compliance for funding comes down to four checks: entity standing, tax standing, licenses/permits, and records consistency — verified in that order.
- Administrative dissolution for a missed annual report or franchise-tax filing is the most common silent compliance failure; check your Secretary of State status before applying.
- Bank statements must be in the applying entity's legal name — because revenue-based approval leans on deposits, a personal-name account is the highest-leverage thing to fix.
- Disclose tax liens and payment plans up front; a disclosed lien with an active plan is often workable, an undisclosed one discovered in underwriting is a red flag.
- Keep your EIN letter (CP 575 or a free IRS 147C) on hand — it ties your entity, tax, and bank records together for verification.
- Revenue-based / MCA marketplaces approve on deposits and revenue over credit: minimum funding around $10,000, FICO 500+, decisions in roughly 24-48 hours, and never guaranteed.
- Legal name, address, and EIN should read identically across state registration, IRS letter, bank statements, and tax returns — every mismatch adds a day to underwriting.
What "business compliance" actually means to a funder
Compliance is a loaded word. To a regulator it means following the law; to a lender or a revenue-based marketplace it means something narrower and more practical: can we verify who you are, that you are legally allowed to operate, and that the entity depositing revenue is the entity signing the agreement? That is the whole game.
When an underwriter says a file has a "compliance problem," they almost never mean you broke a rule on purpose. They mean the paper doesn't reconcile. The business name on the voided check reads one way, the state registration reads another, and the tax ID belongs to a third entity a prior accountant set up and abandoned. Revenue-based and MCA funders approve primarily on bank deposits and revenue rather than credit, so the identity and legitimacy of the depositing entity is load-bearing. If they can't trust the entity, the deposits don't help you.
Practically, compliance breaks into four buckets: entity standing, tax standing, licensing and permits, and records consistency. Work them in that order. Most rejections that look like "we couldn't verify the business" trace back to one of the four being stale, missing, or contradictory.
Step one: confirm your entity is active and in good standing
Start with the state where you formed. Every US state runs a Secretary of State (or equivalent) business search — free, public, and authoritative. Look up your exact legal name and read the status field. You want to see Active, Good Standing, or your state's equivalent. Statuses that signal trouble: Administratively Dissolved, Revoked, Inactive, Delinquent, or Not in Good Standing.
The single most common surprise here is administrative dissolution for a missed annual report or franchise-tax filing. It happens quietly — no one calls you — and a business can keep taking deposits for months while legally dissolved. A funder pulling the same public record you can pull will see it immediately. Reinstatement is usually a form and a fee, but it takes days to weeks depending on the state, so check now, not the morning you need money.
While you are in the record, confirm three fields match your reality: the registered agent is current, the principal address is right, and the listed members or officers are actually the people who will sign. If you operate under a trade name, make sure the DBA / fictitious name is filed at the county or state level. An unregistered DBA on your storefront and your bank account is a frequent, fixable snag.
Step two: verify your tax and EIN standing
Your EIN ties the whole file together — it is what a funder uses to confirm the entity exists federally and to match it against your bank records. Have the IRS EIN confirmation letter (CP 575) or the equivalent 147C letter if you lost the original; you can request a 147C by phone from the IRS at no charge.
Then look at filing status. Are your business returns filed for the most recent complete year? If you owe and are on an IRS installment agreement, that is generally workable — but only if you disclose it. An undisclosed federal or state tax lien is different: liens are public, funders find them, and finding one you didn't mention reads as a red flag about the whole application. If a lien exists, know the balance, whether a payment plan is active, and whether the taxing authority holds a security interest that affects position.
Sales-and-use tax and state payroll tax matter too, especially in retail, hospitality, and any business with employees. Delinquent trust-fund taxes (sales tax you collected, payroll tax you withheld) are treated more seriously than income tax you simply owe, because that money was never yours to keep. Get current or get a documented plan before you apply.
Step three: match licenses and permits to your industry
There is no universal business-license list — it stacks by level and by industry. Work through all three layers:
- Federal: only certain industries (alcohol, firearms, transportation/DOT, agriculture, broadcasting, investment services). Most small businesses need nothing federal.
- State: professional and occupational licenses (contractors, cosmetology, health care, real estate), plus a state sales-tax permit if you sell taxable goods.
- Local: city or county business tax receipt (in some places still called an "occupational license"), zoning/use permits, health-department permits for food, and signage permits.
The compliance question isn't just "do I have a license" — it's "is it current, unexpired, and in the operating entity's name." A contractor's license held personally when the LLC is the one contracting is a mismatch. A food permit that lapsed last quarter is a lapse. For most revenue-based funding these are not underwritten line by line, but a missing or expired license in a regulated trade can void the deal and, worse, can pause your ability to generate the very revenue the funder is lending against.
Step four: reconcile your records so everything says the same thing
This is the step that quietly wins or loses more files than any other. Lay your documents side by side and confirm the legal name, address, and EIN read identically across all of them:
- Secretary of State registration
- IRS EIN letter
- Business bank statements and the voided check / bank letter
- Recent tax return
- Any license or permit
Common breaks: statements in a personal name instead of the entity (you never opened a true business account); an old address from before you moved; a DBA on the bank account that isn't registered; two entities where an accountant formed a holding company you forgot about. Each mismatch forces an underwriter to stop and ask a question, and every question adds a day. Because revenue-based approval leans on your bank deposits, the account must clearly belong to the entity applying. Fix the account title before you apply — it is the highest-leverage cleanup you can do.
If you want to see exactly what an underwriter reads in your deposits and how to present them, see our guide on how underwriters read business bank statements, and our overview of business funding requirements for the full document set.
A compliance self-audit checklist (with example findings)
Run this before you apply. The right column shows the kind of finding that stalls a file and the fix — figures are for example only.
| Check | Where to verify | Example finding that stalls a file | Fix before applying |
|---|---|---|---|
| Entity status | Secretary of State search | For example: LLC "Administratively Dissolved" for a missed annual report | File reinstatement + back report; allow days to weeks |
| Legal name / DBA | State + county fictitious-name records | For example: bank account under a DBA never registered | Register the DBA or retitle the account to the legal entity |
| EIN | IRS CP 575 or 147C letter | For example: original EIN letter lost, no proof on file | Request a 147C from the IRS (free) |
| Tax standing | IRS + state tax accounts | For example: undisclosed state tax lien of, say, $12,000 | Disclose it; set up or confirm a payment plan |
| Licenses/permits | State board + city/county | For example: local business tax receipt expired last quarter | Renew; confirm it names the operating entity |
| Bank records | Your last 3-6 months of statements | For example: statements in owner's personal name | Open a true business account in the entity name |
If every row reads clean, your file will move on its own merits — and with a revenue-based marketplace approving on bank deposits and revenue over credit, a clean compliance picture plus healthy deposits is a strong position even at a FICO in the 500s.
Decision framework: when a compliance-first check pays off — and when to move fast
Run the full compliance audit first when: you have never applied before and aren't sure your paper reconciles; you have moved, rebranded, or added a DBA; you operate in a licensed trade (contracting, health, food, transport); you know or suspect a tax lien or an old dissolved entity is floating around; or ownership has changed. In these cases a two-hour cleanup prevents a two-week stall.
You can move quickly and clean up in parallel when: your entity shows Active/Good Standing, your bank account is clearly in the entity name, your deposits are steady, and any tax balance is small and on a documented plan. Minor, disclosable items rarely block a revenue-based approval on their own, and timelines can run as fast as 24-48 hours.
Fix before you apply — do not paper over — when: the entity is dissolved or revoked; the depositing account is in a personal name or a different entity; a required license is expired in a regulated trade; or there is an undisclosed lien. These are the items that don't just slow a decision, they reverse it. Disclosure beats discovery every time. And be wary of any offer that promises approval regardless of these gaps — legitimate funding is never guaranteed, and a compliant file is what earns a real yes.
Frequently asked questions
How do I check if my business is in good standing?
Search your state's Secretary of State (or equivalent) business database — it is free and public — and read the status field. "Active" or "Good Standing" is what you want. "Administratively Dissolved," "Revoked," or "Delinquent" means you have a filing or fee to clear before a funder will treat the entity as real.
Does my business have to be fully compliant to get revenue-based funding?
It has to be verifiable and honestly disclosed, which is a lower bar than perfect. Revenue-based and MCA marketplaces approve mainly on bank deposits and revenue over credit, so the entity depositing that revenue must be active and clearly yours. Small, disclosed items like a tax payment plan usually don't block approval; a dissolved entity or an undisclosed lien can.
Will a tax lien stop me from getting funded?
Not automatically. What matters is disclosure and a plan. A lien you disclose, with an active payment arrangement, is often workable. A lien the funder discovers because you didn't mention it damages the whole application, because it makes an underwriter question everything else you reported.
My bank statements are in my personal name — is that a problem?
Yes, and it is the most common fixable one. Because approval leans on your deposits, the account must clearly belong to the applying entity. Open a true business account in the legal entity's name before you apply. This single fix removes more back-and-forth than almost any other cleanup.
What licenses does a funder actually check?
For most revenue-based funding, licenses aren't underwritten line by line — but a missing or expired license in a regulated trade (contracting, food, health care, transport) can void a deal or interrupt the revenue being lent against. Confirm any required license is current, unexpired, and held in the operating entity's name.
What is the difference between my legal name and a DBA, and why does it matter?
Your legal name is the entity registered with the state; a DBA ("doing business as" / fictitious name) is a trade name you operate under. It matters because the name on your bank account, your registration, and your application should reconcile. An unregistered DBA on your account is a frequent snag — register it or retitle the account.
How long does it take to fix a compliance gap before applying?
It varies. Requesting an IRS 147C letter or renewing a local permit can be same-day to a few days. Reinstating a dissolved entity or setting up a state tax payment plan can take days to a few weeks depending on the jurisdiction. That is exactly why you check before you need the money, not the morning you apply.
Can I be approved with a low credit score if my compliance and revenue are clean?
Yes. Revenue-based marketplaces weigh bank deposits and revenue over credit and commonly work with FICO scores in the 500s, minimum funding around $10,000, and decisions in roughly 24-48 hours. A clean compliance picture plus steady deposits is a strong file even when credit is thin. No legitimate funder guarantees approval, though.
