How to Use a Secretary of State API for Business Verification: A Step-by-Step Guide

November 29, 2024
November 28, 2024
3 Minute Read
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How a Secretary of State API Works

A Secretary of State API allows lenders to access real-time business entity details directly from secretary of state portals. This data can include:

  • Business name and registration details
  • Operational status (active, inactive, dissolved)
  • Filing date and history
  • Principal address and registered agent information
  • Officer and director information

Core Functionality:

Purpose

The primary function of a Secretary of State API, like the one offered by Cobalt, is to automate the retrieval of business information registered with various state government agencies. This information is vital for due diligence, KYC/AML compliance, underwriting, and other business verification processes.

Inputs

The API typically accepts a business name and its state of jurisdiction as input parameters. These inputs are often obtained from loan applications or other forms where businesses provide their basic registration details.

Real-Time Retrieval

Cobalt's API emphasizes real-time data retrieval as a core differentiator. When a request is made, the API dynamically fetches data from the relevant Secretary of State website, ensuring the information is up-to-date. This contrasts with some providers who rely on periodically updated databases, potentially leading to outdated information.

Data Normalization

A significant challenge in working with Secretary of State data is the inconsistency in formatting and data fields across different states. Cobalt addresses this through data normalization techniques:

  • Standardized Field Names: The API outputs data with consistent field names, regardless of the state's terminology, simplifying data integration.
  • Status Normalization: Recognizing the variety of terms used by states to denote business registration status, 

Cobalt provides both the raw status from the state website and a normalized "active" or "inactive" flag.

Confidence Scoring

Cobalt’s API incorporates confidence scoring to address potential variations in business names or user input errors. It returns the most likely match along with alternative results, allowing users to assess the accuracy of the retrieved data.

Things To Consider

  • Variable Data Availability: The comprehensiveness of the data returned by the API is limited by the information each state publicly discloses. Some states, like New Jersey and Delaware, are known for providing minimal data.
  • Data Quality: The accuracy of the API's output is dependent on the quality of information maintained by each Secretary of State. Inconsistent or incomplete data at the source will directly impact the API's reliability.
  • Latency: Real-time data retrieval, while beneficial for accuracy, can introduce latency issues, especially with states that have slower or less efficient online systems.
  • Cost: Accessing a Secretary of State API typically involves a cost per lookup, which can vary based on usage volume and the specific services used.

How to Integrate the Secretary of State API into Existing Systems

The Cobalt Intelligence API is designed for easy integration into existing systems. The API is RESTful, meaning it uses a standardized set of commands for interacting with web services. This makes it straightforward for developers to connect the API to loan management systems, CRMs, and other platforms.

Cobalt Intelligence offers:

  • Comprehensive API documentation
  • Technical implementation assistance
  • Integration guidance
  • Same-day email support

Steps to Using a Secretary of State API for Business Verification

  1. Sign up for an API key: Most Secretary of State APIs require users to sign up for an account and obtain an API key. This key is used to authenticate requests and track usage.
  2. Submit a request: To verify a business, lenders need to submit a request to the API. This request typically includes the business name and the state of registration.
  3. Receive a response: The API will process the request and return a response containing the requested business data.
  4. Review the data: Lenders can then review the data to verify the business's legitimacy, operational status, and other relevant information.
  5. Make a decision: Based on the data retrieved, lenders can make an informed decision about extending credit to the business.

Cobalt Intelligence stands out as a leading Secretary of State API provider for several reasons:

  • Real-time data: Unlike some competitors who rely on cached data, Cobalt Intelligence pulls data directly from state records in real-time, ensuring the highest level of accuracy.
  • Comprehensive coverage: The API covers all 50 U.S. states and the District of Columbia.
  • Specialized for alternative lending: The API is tailored to meet the specific needs of alternative lenders, providing access to specialized court records, UCC filings, and contractor license searches.
  • Excellent support: Cobalt Intelligence offers comprehensive documentation, technical implementation assistance, and same-day email support.

A Secretary of State API can be a powerful tool for alternative lenders looking to streamline their business verification processes, reduce risk, and make more informed decisions. Cobalt Intelligence offers a leading solution with real-time data, comprehensive coverage, and dedicated support.

How does the Secretary of State API handle data normalization challenges across different state formats?

Each state's Secretary of State website structures and presents business data differently, posing a hurdle for creating a consistent and easily consumable API output. 

Here’s how Cobalt addresses this challenge:

Field Name Standardization

Cobalt normalizes field names across all states, ensuring consistent data labeling regardless of the source. This means that a field like "Entity ID" or "Filing Date" will have the same name in the API response, even if those terms aren't used on a particular state's website.

Data Availability Limitations

Cobalt acknowledges that some states offer more comprehensive data than others. The API returns the same standardized fields for all states but leaves certain fields empty if the information isn't publicly available from the source. For instance, New Jersey provides minimal information, and Delaware doesn't disclose the filing status without a fee. Cobalt's API reflects these limitations by omitting or flagging such data points.

Status Normalization

States use various terms to describe a business's registration status, leading to potential confusion and interpretation challenges. Cobalt returns the raw status verbatim from the state's website in one field but also provides a normalized "active" or "inactive" field based on its interpretation of the state's terminology. This dual approach offers both transparency and a simplified status indicator for programmatic decision-making.

Read Secretary of State Business Entity Status Dictionary Guide

Confidence Scoring for Name Matching

When searching for a business by name, Cobalt API acknowledges potential variations in business names and entity types. They implement a confidence score to indicate the likelihood of a match, returning the most likely result along with a list of potential alternatives. This helps users assess the accuracy of the match and explore other possibilities.

Address Matching Logic

Cobalt prioritizes matching businesses with verified addresses. If multiple businesses share the same name, the API prioritizes the result with a matching address provided by the user. This logic enhances accuracy, especially when dealing with common business names.

How does the Secretary of State  API batch processing capabilities?

Cobalt API has the ability to handle thousands of lookups daily. The API is equipped for batch processing.

Callback URLs and Asynchronous Processing: 

Cobalt API uses callback URLs or webhooks to handle asynchronous processing of requests, particularly when dealing with potentially lengthy retrieval times from certain states. This mechanism allows users to submit a batch of requests and receive the results as they become available, without needing to maintain an active connection or repeatedly poll for completion. This functionality could be extended to support batch processing for portfolio reviews. Users could provide a list of businesses and receive the updated Secretary of State data for their entire portfolio asynchronously.

Database Cache for Rapid Retrieval

Cobalt maintains a database cache of previously retrieved Secretary of State data. While not comprehensive, it covers a 70% portion of US businesses. For portfolio reviews, leveraging this cached data could expedite the process, especially if a large percentage of the portfolio consists of established businesses. The API could prioritize retrieving data from the cache for faster turnaround times, reserving live searches for businesses not found in the cache.

Secretary of State API uptime SLAs or Rate Limiting

Cobalt primarily retrieves data live from Secretary of State websites upon request. This real-time approach ensures data freshness but introduces latency due to the time taken to interact with external websites.

Latency Variations: The time taken to retrieve data varies significantly between states, ranging from a few seconds to a minute or two. This variation stems from differences in website responsiveness and data access methods.

Caching Strategy: Cobalt maintains a database cache of business data, covering approximately 70-80% of US businesses. Users can opt to query the cache first for faster responses.

Failover to Cache: If a live data request fails due to a state website being down, Cobalt automatically tries to retrieve data from its cache.

How can the Secretary of State API integration with other verification sources (EIN validation, bank data)

Cobalt's API could integrate with other verification sources like EIN validation and bank data:

● EIN Validation:

  • Cobalt's existing TIN verification functionality. This feature allows users to confirm whether an EIN or SSN matches the provided business name by checking against the IRS database.
  • This integration is already part of Cobalt's API offering, demonstrating its understanding of the need for multi-source verification.
  • Using Cobalt's TIN verification alongside Secretary of State data can provide a more comprehensive view of a business's legitimacy and help flag potential fraud.

● Bank Data:

  • While Cobalt doesn't directly retrieve bank data, many of the customers, particularly in the lending space, heavily rely on bank statement analysis for underwriting.
  • Several companies like Plaid, MoneyThumb, and Oculus, which specialize in bank data aggregation and analysis can be easily integrated with the API.
  • Potential Integration: Cobalt's API could be integrated with these or similar services to streamline the underwriting process. 

Imagine a scenario where a lender, upon receiving an application, triggers both a Cobalt API call for Secretary of State data and a separate call to a bank data provider like Plaid. 

This integration would allow the lender to receive a consolidated view of the applicant's business information, including registration status, financial history, and creditworthiness.

Read How Secretary of State API Helped Idea Financial Lend Better

Access Real-Time Secretary of State Data and Automate your underwriting process. We help Alternative Funders work smarter through AI Technology. Get our FREE AI Tools here

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