Why Business Statuses Matter?
A business's status reveals important information about its operational health and legal standing, which are critical factors for lenders to assess when evaluating lending risks.
- Risk assessment: A company's good standing status provides lenders insight into the business's compliance and financial health. Lenders view companies not in good standing as higher risk, which can impact loan approval or terms.
- Loan requirements: Many lenders require a Certificate of Good Standing as part of the loan application process. Not being able to provide this can delay or derail financing.
- Legal protections: Maintaining good standing preserves the limited liability protection that business entities like LLCs and corporations provide. This reduces risk for both the business and potential lenders.
- Credibility: Good standing status signals that a business is responsibly managed and compliant with state regulations. This enhances credibility with lenders.
- Expansion capabilities: Companies need to be in good standing to expand into new states. This is important for lenders evaluating a company's growth potential.
Indiana Secretary of State Business Search Guide
Indiana's 28 Business Entity Statuses You Need to Know
1. Active
The entity is currently operational and in good standing, having met all regulatory and legal requirements. This status generally indicates a lower risk for lenders, as it suggests the business is compliant and likely to be financially stable.
2. Admin Dissolved
The entity has been administratively dissolved by the state due to failure to comply with legal obligations such as filing required reports or paying fees. Lenders should be cautious with these entities, as this status indicates non-compliance and potential financial instability.
3. Inactive
The entity is no longer active, but it has not been formally dissolved. This status might indicate that the entity is not currently conducting business. Lenders should be wary of inactive entities, as they may not have current income or assets to support loan repayment.
4. Cancelled
The entity's registration or a specific filing has been officially cancelled, often at the entity's request or due to non-compliance. This status suggests the business is no longer operating legally, posing a high risk for lenders.
5. Voluntarily Dissolved
The entity has been dissolved by the owners or members voluntarily and is no longer operational. Lenders should avoid extending credit to voluntarily dissolved entities, as they have ceased operations and likely have no means of repayment.
6. Revoked
The entity's right to conduct business in Indiana has been revoked due to non-compliance with state regulations. This status indicates serious compliance issues and high risk for lenders, as the business cannot legally operate.
7. Withdrawn
The entity has voluntarily withdrawn its registration and is no longer authorized to do business in the state. Lenders should be cautious, as this status suggests the business may have ceased operations in Indiana.
8. Merged
The entity has merged with another and no longer exists as a separate entity. Lenders should reassess the creditworthiness of the resulting entity, as the merger may have impacted financial stability and operational structure.
9. Judicially Dissolved
The entity has been dissolved by court order, often due to legal disputes or regulatory issues. This status indicates severe problems and high risk for lenders, as the business has been forcibly closed by legal action.
10. Non-Qualified Merged
The entity has merged but did not meet all the necessary qualifications, possibly in the context of foreign entities. Lenders should carefully evaluate the resulting entity's legal status and financial stability before considering any lending decisions.
11. Surrendered
The entity has surrendered its right to operate, often in connection with withdrawing from the state. This status suggests the business is no longer operating in Indiana, posing significant risk for lenders.
12. Reserved
A name or entity status has been reserved, indicating that it may be used in the future but is not currently active. Lenders should note that this status does not represent an operational business and should not be considered for lending.
13. Expired
The entity's registration or name reservation has expired, usually due to failure to renew. This status indicates potential compliance issues and operational instability, increasing risk for lenders.
14. Abandoned
The entity or a specific filing has been abandoned, typically meaning it was never completed or finalized. Lenders should be cautious of abandoned entities, as they may not represent fully formed or operational businesses.
15. Converted
The entity has undergone a legal conversion to another type of entity (e.g., from an LLC to a corporation). Lenders should reassess the new entity structure and its implications for creditworthiness and liability.
16. Pending Admin Dissolution
The entity is in the process of being administratively dissolved, usually due to non-compliance. This status indicates significant risk for lenders, as the business is likely facing compliance issues and potential closure.
17. Pending Revocation
The entity's status is under review and may be revoked if compliance issues are not resolved. Lenders should be cautious, as this status suggests potential regulatory problems that could affect the business's ability to operate.
18. Pending Conversion
The entity is in the process of converting to another type of entity. Lenders should wait for the conversion to complete before making lending decisions, as the new structure may affect creditworthiness and liability.
19. Converted Out
The entity has converted out of its original form and is no longer recognized in its previous structure. Lenders should reassess the new entity structure and its implications for creditworthiness and operational stability.
20. Pending
The entity's filing or status is pending and has not yet been finalized. Lenders should wait for the final status before making lending decisions, as the outcome may affect the entity's legal standing and operational capabilities.
21. Past Due
The entity has missed a filing deadline or payment and is at risk of further penalties or dissolution. This status indicates potential financial instability or compliance issues, increasing risk for lenders.
22. Pending Domestication
The entity is in the process of changing its jurisdiction from another state or country to Indiana. Lenders should wait for the domestication to complete and assess the implications of the jurisdictional change on the entity's legal status and operations.
23. Pending Surrender
The entity has filed to surrender its registration but the process is not yet complete. Lenders should be cautious, as this status suggests the business intends to cease operations in Indiana.
24. Pending Merger
The entity is in the process of merging with another entity. Lenders should wait for the merger to complete and reassess the resulting entity's financial stability and operational structure before making lending decisions.
25. Voluntarily Dissolved (Name Protected)
The entity has been voluntarily dissolved, but its name is protected and cannot be used by another entity for a specific period. Lenders should avoid extending credit to these entities, as they have ceased operations despite name protection.
26. Pending Share Exchange
The entity is involved in a pending share exchange process, typically related to restructuring or mergers. Lenders should wait for the share exchange to complete and evaluate its impact on the entity's ownership structure and financial stability.
27. NSF
Non-Sufficient Funds. The entity has attempted a transaction, such as a payment, that was not completed due to insufficient funds. This status indicates potential financial instability and increased risk for lenders.
28. Terminated
The entity's existence has been formally terminated and it no longer exists as a legal entity. Lenders should not consider terminated entities for lending, as they have ceased to exist legally and have no means of repayment.
Implications for Alternative Lenders
Understanding these statuses is crucial for:
- Risk Assessment: Each status provides insights into the business's stability and compliance.
- Due Diligence: Knowing what each status means allows for more targeted questions and investigations.
- Portfolio Management: Regularly checking the status of businesses in your portfolio can help you proactively manage risk.
- Competitive Advantage: This knowledge allows you to make quicker, more informed decisions than less-informed competitors.
By mastering Indiana's business statuses, you're equipping yourself with a powerful tool for risk assessment and decision-making. Remember, while these statuses provide valuable insights, they should be considered alongside other factors in your lending criteria.
Disclaimer: This guide is for informational purposes only and should not be considered legal advice. Always consult with legal professionals for specific situations.