Who should use the Cobalt Intelligence API? (And who shouldn't)

There is a specific breaking point where manual processes go from "manageable" to "margin-killing."

If you are funding five deals a month, you don't need an API. You can have your junior analyst visit the Secretary of State website, complete the CAPTCHA, search the name, and screenshot the result. It takes 10 minutes. It costs you effectively nothing.

But if you are funding 50, 500, or 5,000 deals a month, that "free" search becomes your most expensive bottleneck.

We designed the Cobalt Intelligence Secretary of State (SOS) API for specific lending profiles. Here is the breakdown of who actually sees ROI from this integration, and frankly, who should stick to manual searches.

The Volume Threshold: Where the Math Makes Sense

The primary qualifier isn't just "being a lender"—it's volume.

The "Manual is Fine" Zone (< 50 Applications/Month)

If you receive fewer than two applications a day, the engineering resources required to integrate an API usually outweigh the operational savings. Stick to the state portals.

The "ROI Positive" Zone (50+ Applications/Month)

At 50 applications, your team spends ~12 hours a month just on SOS lookups (assuming 15 minutes per file for search, screenshot, and upload). That is roughly $300–$500 in labor. At this stage, the API becomes cheaper than the human, and the speed advantage starts winning you deals.

The "Critical Necessity" Zone (500+ Applications/Month)

At this volume, manual verification is negligence. You are likely employing offshore teams or slowing down your highest-paid underwriters with data entry. This is where "incompletes" pile up because humans make typos transferring data from the SOS site to your LOS.

Use Cases by Lender Type

1. Merchant Cash Advance (MCA) & Working Capital

The Driver: Speed and "Time in Business" verification.

You are racing against five other funders. If your underwriter has to pause to verify the business exists, you lose the deal.

• How it works: You hit the API instantly to verify the filingDate. If the business is less than 6 months old (or whatever your knockout criteria is), you auto-decline before pulling credit.
• Real Example: Idea Financial uses this data to prioritize leads based on revenue and verified SOS data, automating a process that used to be their "Achilles heel".

2. Equipment Financing

The Driver: Asset security and accurate UCC filing.

You aren't just underwriting cash flow; you are securing collateral. You cannot file a valid UCC-1 financing statement if you don't have the exact legal name and entity structure from the state.

• How it works: The API pulls the exact legal name string (e.g., "Acme Trucking, L.L.C." vs. "Acme Trucking LLC"). This ensures your lien is perfected correctly the first time, protecting you if the borrower defaults.

3. Online Marketplaces & Brokerages

The Driver: Reducing "Incompletes" and routing deals.

You sit between the borrower and the funder. If you send a file to a lender with the wrong business start date or a dissolved entity status, the lender kicks it back.

• How it works: 1West, a major marketplace, uses the API to "clean" data before submission. They found that manually checking files caused massive bottlenecks. By automating it, they reduced friction with their lending partners and ensured accurate offers were presented to borrowers.

4. Embedded Finance & Fintech

The Driver: User Experience (UX) and KYB.

You don't want a user to fill out 20 fields. You want them to type their business name and have the rest auto-populate.

• How it works: The user types "Main Street Bakery" and selects "Florida." The API returns the address, officers, and entity type, pre-filling the application. This reduces drop-off rates significantly.

Who Should NOT Use This API?

We turn away business when the fit isn't right. You should not use this API if:

1. You are a Consumer Lender: This API connects to commercial Secretary of State databases. We cannot verify individuals, only registered business entities.
2. You rely solely on Credit Reports: If you trust the Experian/Equifax business profile 100% and don't care about the legal state registration status (which is risky, but some do it), this API adds a layer you might not want.
3. You have zero engineering resources: While the integration is simple (RESTful API), you need someone who knows how to send a POST request and handle a JSON response. If you run your entire lending shop on Excel and email without any technical support, stick to the Cobalt portal/dashboard manual search.

Decision Tree: Is This API Right for You?

Use this logic flow to determine if you need to integrate:

• Q1: Do you process commercial/business applications?
  
  • No → STOP. (This is for B2B only).
  • Yes → Continue.
• Q2: What is your monthly application volume?
  
  • < 50 → Wait. Stick to manual lookups for now.
  • 50+ → Continue.
• Q3: Do you have an LOS (Loan Origination System) or custom internal database?
  
  • No (We use email/PDFs) → Use the Cobalt Web Dashboard (No code needed).
  • Yes → Continue.
• Q4: Is "Time in Business" a hard knockout rule for you?
  
  • Yes → Integrate. The API allows you to auto-decline based on filingDate instantly.
  • No → Continue.
• Q5: Does your team spend more than 5 minutes verifying an entity?
  
  • Yes → Integrate. You will see immediate ROI on labor savings alone.

Customer Profiles (Anonymized)

Profile A: The High-Volume MCA Shop

• Volume: 300 apps/day.
• Before: Had a team of 8 offshore data entry specialists logging into state sites. Error rates were high; dissolved businesses were slipping through.
• After: Integrated Cobalt SOS API. Reduced offshore team to 2 (focused on complex overrides). Auto-declines any business with normalizedStatus != 'Active'.
• Result: Saved $12k/month in operational costs; reduced default rate by catching dissolved entities early.

Profile B: The Boutique Equipment Lender

• Volume: 75 apps/month.
• Before: Senior underwriters were doing their own searches. It was annoying and distracted them from analyzing complex credit structures.
• After: Connected Cobalt to Salesforce. When a lead is created, the SOS PDF is automatically attached to the file.
• Result: Underwriters stopped complaining about "admin work" and focused on structuring deals.

Next Step: Audit Your Process

Don't just take my word for it. Go look at your last 50 funded deals.

1. How many minutes did your team spend verifying the entity on the state site?
2. Did you fund any deals where the entity was actually inactive or dissolved at the time of funding?

If the answer to #2 is "I don't know," or if the answer to #1 is "too many," it is time to look at automation.

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