The Legal Documents a Lender Will Ask For Before a Commercial Loan in Florida

Funding Readiness · KVasquez Law, Brickell, Miami

When a bank, an SBA lender or an equipment finance company reviews a business, the credit analyst looks at revenue, cash flow and the owners' credit. In parallel, someone reads the legal file: the documents that prove the company exists, who owns it, who is allowed to sign for it, and what other creditors already have a claim on its assets.

The application lists three owners, the operating agreement lists two, and the tax return shows a fourth. Each mismatch generates a condition, each condition takes weeks, and a file that takes too long often loses its approval.

What follows is the legal side of a typical commercial loan file in Florida, in the order an underwriter usually works through it. For each item, the request is listed together with the problem that most often holds it up.

1. The entity itself

The lender first confirms that the borrower is a real, active company with the exact name on the application.

• Articles of organization or incorporation, plus any amendments filed with the Florida Division of Corporations.
• A current certificate of status showing the company as active on Sunbiz. A company that missed its annual report can be administratively dissolved, and most lenders will not close with a dissolved borrower.
• The IRS letter confirming the EIN, usually the original CP 575 or a 147C replacement letter. The legal name on that letter should match Sunbiz exactly.
• A fictitious name registration if the business operates under a trade name. Florida law requires one before doing business under a fictitious name, section 865.09, Florida Statutes, and bank deposits under an unregistered name are a common flag.

Common problem. The name on the bank account, the EIN letter and Sunbiz differ by a word, an "Inc." or a comma. It sounds trivial. To an underwriter it raises the question of which entity is actually borrowing.

2. Ownership

The lender has to know who owns the company, because owners above a set percentage usually sign personal guarantees and go through their own credit and background review. For SBA loans, holders of at least twenty percent generally must guarantee the loan, 13 C.F.R. 120.160.

• The operating agreement for an LLC, or bylaws and shareholder records for a corporation, signed, with a current ownership schedule.
• Proof of any change in ownership: assignment of membership interest, buyout agreement, stock transfer records.
• Consistency between those documents, the K-1s on the business tax return, and the ownership listed on the application.

Common problem. A partner who left years ago and was never formally bought out, or someone who was promised a percentage in conversation. Both show up as an owner on one document and not another, which is treated at length in cleaning up ownership before you apply for financing.

3. Authority to borrow

Owning a company and being authorized to bind it to a loan are separate questions. Lenders resolve that by asking the company to authorize the transaction in writing.

• A borrowing resolution or written consent of the members, managers or directors approving the loan, the collateral and the people who will sign.
• A certificate of incumbency identifying the officers or managers and their signatures.
• Member consent where the operating agreement requires it, for example where the agreement requires unanimous approval for debt above a set amount.

Common problem. The operating agreement conditions borrowing on a consent nobody obtained, which means the signature on the note is open to challenge by the member who was never asked.

4. Existing debt and liens

The lender will run a UCC search against the company's exact legal name and compare every filing to the debt schedule on the application.

• A debt schedule listing every loan, line, lease and merchant cash advance, with balances and payments.
• Payoff letters for anything the new loan will retire.
• UCC-3 termination statements for debts already paid. A financing statement stays on the record until it is terminated or lapses, even after the debt is gone.
• Disclosure of any judgments, tax liens or pending lawsuits. The lender will usually find them anyway, and an undisclosed one costs more credibility than a disclosed one.

Common problem. Merchant cash advances, which deserve their own attention, because funders commonly file broad liens and take daily debits that show up on every bank statement in the file. Stacked filings will stop a refinance before underwriting starts. That subject is treated separately in what a merchant cash advance really is, and what to do when it goes wrong.

5. Key contracts and the lease

Underwriters read the contracts the business depends on, looking for anything that could cut off the revenue that repays the loan.

• The commercial lease: the remaining term against the loan term, renewal options, and whether the landlord must consent to a lien on equipment or fixtures. Many lenders request a landlord waiver.
• Major customer and supplier contracts: termination rights, change-of-control clauses, and whether receivables can be pledged.
• Franchise agreements, if any, including franchisor consent requirements.

Common problem. The company's largest customer relationship runs on an expired contract, or on none at all.

6. Licenses, permits and compliance

The last section of the file is the one most businesses assume is in order.

• Local business tax receipts for the city and county where the business operates.
• Professional or trade licenses required for the business, for example through the Florida Department of Business and Professional Regulation, held by the right person or entity.
• Filed tax returns for the years requested, with no unfiled years.

Common problem. An unfiled year, or an open matter with the Internal Revenue Service or the Florida Department of Revenue that was never disclosed. Either should be raised together with its resolution status rather than left for the lender to discover.

Putting it together

None of these items is unusual, and most can be fixed in days once someone identifies them. The trouble is timing: an issue that would take a week to fix before submission can take two months to clear once it is an underwriting condition, and some lenders simply decline rather than wait.

The practical approach is to review the file the way the lender's counsel will, before the lender does. Pull your own Sunbiz record and UCC search, line up the ownership documents against the tax return, and draft the authority documents in advance. If the review turns up something structural, such as an ownership dispute or a stack of advances, deal with that first.

What the firm does on these matters

A Funding Readiness Review is that exercise, done before the application goes in. It covers the entity record and certificate of status, the ownership chain against the returns, the authority documents, a UCC search with terminations where filings are stale, and a read of the lease and the material contracts for the provisions a lender will ask about. Where the review turns up a defect, the corrective documents are drafted as part of the work rather than handed over as a list.

For companies that want the same review standing rather than once, it is part of the outside general counsel engagement, alongside entity governance and contracts. Businesses that need the underlying records built or corrected first are handled through corporate and business law.

Karina A. Vasquez handles these matters directly, in English or Spanish, from the first review through closing.

This article is provided for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship with KVasquez Law. Statutes, regulations and lender requirements change, and outcomes depend on the specific documents and the facts of each matter. Consult a qualified attorney about your circumstances before acting.