Quick overview

Lenders use the phrase “good standing” to describe a business that meets its state-level legal requirements—things like annual or biennial reports, franchise or excise taxes, and a maintained registered agent. For underwriting teams, good standing is a low-effort signal that the borrower is legally active and less likely to have hidden compliance problems that could impair repayment or collateral value.

This article explains exactly what lenders check, how to verify your status, practical steps to restore good standing, and what documents to provide during a loan application.

Why lenders care about good standing

  • Legal existence: A business not in good standing may be administratively dissolved or suspended, which can limit its ability to borrow, sign contracts, or pledge collateral.
  • Title and collateral risk: If a business lacks legal status, creditors may face problems enforcing liens or foreclosing on assets.
  • Reputational and operational risk: Lenders treat compliance failures as a potential signal of poor management, tax trouble, or other financial stress.

Federal and government-backed lenders often require formal proof. For example, SBA programs and many banks expect a current certificate of good standing as part of the closing package (SBA guidance and lender checklists). For general guidance see the U.S. Small Business Administration (sba.gov) and state Secretary of State offices.

What lenders typically check

Lenders vary, but most underwriting teams will verify some or all of the following:

  • Certificate of good standing (also called Certificate of Existence or Status) from the issuing state. This is a dated document showing compliance as of a snapshot in time.
  • Recent state filings: annual reports, statements of information, or biennial reports required by the state.
  • Proof of tax compliance: federal tax returns and, for some lenders or loan types, state tax clearance letters if the state requires them for certain transactions.
  • Business licenses and permits relevant to the borrower’s industry.
  • Corporate records: operating agreement or bylaws, minutes or resolutions authorizing borrowing, and evidence of an authorized signer.
  • Registered agent information and address consistency with lender records.
  • UCC searches and lien searches on business assets.

Lenders may also look at personal credit and sign personal guarantees—separate from good-standing checks—when evaluating any small business loan.

How to check your business’s good standing

  1. Find the correct agency. Most states publish a business search tool on the Secretary of State (or equivalent) website. Search by entity name or entity number.
  2. Look for a current status line. The state record will usually say something like “Active,” “In Good Standing,” “Revoked,” or “Forfeited.”
  3. Order a certificate. If your lender requires proof, order a certificate of good standing (online or by mail) from the state. Many states offer expedited processing for a fee.
  4. Check federal and state tax accounts. Being listed as active with the SOS does not guarantee tax compliance. Verify federal returns with your accountant and check state tax agency requirements.

Official state lookups: search your Secretary of State’s business search tool (e.g., by visiting the state’s website). For general borrowing rules and documentation, see SBA guidance at sba.gov and tax filing expectations at irs.gov.

How to restore good standing (step-by-step)

If a search shows your company is not in good standing, these are the common fixes. Timelines and exact requirements vary by state, so check the specific Secretary of State page for your jurisdiction.

  1. Identify the cause. Common causes: unfiled annual reports, unpaid state filing fees, lapsed registered agent, or administrative dissolution for failure to file.
  2. Collect required documents. You may need completed annual reports, notarized forms, or updated corporate resolutions.
  3. Pay outstanding fees and penalties. States typically allow reinstatement after payment; some require filing multiple years of reports.
  4. Address tax issues. If state tax delinquencies exist, you may need a tax clearance or to enter an installment agreement with the state tax agency.
  5. File for reinstatement. Follow the state’s reinstatement or revival procedure. Processing times range from same-day (expedited) to several weeks.
  6. Order a new certificate. After reinstatement, obtain a fresh certificate of good standing to give to your lender.

In my practice I’ve seen businesses complete reinstatement within a few days when the issue was a single missed annual report; tax-related reinstatements commonly take longer. Keep the lender informed — many will accept a written plan and proof of filings while final certificates process.

Documents lenders will commonly request (beyond the certificate)

  • Executive summary or business plan if the lender is unfamiliar with your business.
  • Recent federal business tax returns and year-to-date financial statements.
  • Personal financial statements and credit reports for owners who provide guarantees.
  • Corporate resolutions or board consent authorizing the loan and signer.
  • Proof of insurance and appraisals for collateral-backed loans.

See our lender document checklist for a complete list: Checklist: Documents Needed for a Commercial Loan Application.

Also review how lenders use underwriting ratios to evaluate your loan request: Underwriting Small Commercial Loans: Key Ratios Lenders Use.

If you want to strengthen the presentation of your financials, our guide on preparing financials explains what lenders want to see: Preparing Financials That Impress Commercial Lenders.

Timing and cost expectations

  • Certificate fees and filing fees vary by state; there’s no national standard. Expect nominal fees for certificates (often under $100) and higher costs if you need expedited service.
  • If reinstatement requires paying multiple years of reports or state taxes, costs can grow quickly. Factor penalties and possible professional fees for accountants or attorneys.
  • Lenders may allow conditional closings with a covenant to deliver the certificate within a set period.

Always check the relevant Secretary of State and state tax agency websites for exact fees and processing times.

Common mistakes to avoid

  • Assuming “active” on a sales tax account equals corporate good standing. State business status and state tax accounts are separate.
  • Waiting until the loan application to check your status. Verify early — some financing windows are tight.
  • Giving lenders incomplete corporate records. Missing resolutions or unsigned operating agreements commonly slow closings.

Short case study from practice

A midsize construction client was denied a bank term loan because their LLC had missed two annual reports in one state and one franchise-tax filing in another. We prioritized the state reinstatements and obtained a certificate of good standing within three weeks, negotiated a cleanup plan with the bank, and closed a scaled loan that matched their cash flow. Early verification would have avoided the delay and the bank’s initial conditional decline.

Final checklist: before you apply for financing

  • Run a Secretary of State business search and order a certificate of good standing if required.
  • Confirm federal and state tax filings are up to date; resolve delinquencies or secure a payment plan.
  • Prepare corporate records (resolutions, operating agreement, registered agent info).
  • Assemble financial statements and tax returns. Use our loan document checklist to cross-check items.
  • Communicate with your lender if you expect timing or reinstatement delays.

Sources and further reading

  • U.S. Small Business Administration (SBA): sba.gov (loan documentation guidance and program requirements).
  • Internal Revenue Service (IRS): irs.gov (federal tax filing requirements).
  • Consumer Financial Protection Bureau (CFPB): consumerfinance.gov (consumer-facing finance guidance).
  • State Secretary of State websites: use your state’s business search and reinstatement pages for official instructions.

Professional disclaimer: This content is educational and general in nature. It is not legal or tax advice. For decisions about your business entity, tax obligations, or loan negotiations, consult a licensed attorney or a CPA experienced in business finance.

If you’d like, review the linked checklists and underwriting guides above to make sure your documentation and financials are loan-ready.