What types of data can be retrieved through a Secretary of State API

Efficiently verifying business legitimacy, assessing risk, and ensuring compliance hinges on the availability of comprehensive and reliable information. Secretary of State (SOS) APIs have emerged as pivotal tools, offering direct access to a wealth of data that can transform lending operations. This blog post delves into the types of data that can be retrieved through an SOS API, highlighting the benefits and use cases for alternative lenders and institutional lending executives.

Understanding the Power of Secretary of State APIs

Secretary of State APIs provide a direct digital pathway to the official records maintained by state-level Secretary of State offices. These APIs bypass the traditional bottlenecks of manual verification, offering instant access to crucial business information. By integrating an SOS API into their systems, lenders can automate due diligence processes, reduce fraud risk, and make more informed decisions.

The Breadth of Data Available

The data accessible through a Secretary of State API is extensive, offering a detailed view of a business entity's profile. This information is invaluable for verifying the legitimacy of a business, understanding its operational status, and assessing potential risks.

1. Core Business Information

• Entity Name and Status: The most fundamental piece of information is the legal name of the business and its current status (e.g., active, inactive, dissolved). This confirms whether the business is in good standing and legally authorized to operate.

Verifying the entity name and status is the first step in ensuring that the lender is dealing with a legitimate and legally compliant business. Funding an inactive or dissolved entity can lead to significant financial and legal repercussions.

• Filing Date and Business Start Date: These dates provide a timeline of the business's existence, which is crucial for assessing its stability and experience. Lenders often use this information to determine eligibility for certain loan products or to evaluate the business's track record.

The filing date and business start date offer insights into the longevity and operational history of the business. This information can be used to gauge the business's resilience and its ability to meet financial obligations. As Kunal, CEO of 1West, explains, automatically retrieving accurate business start dates significantly impacts approval rates. 

Example: If a business claims to have been operating for five years but the SOS data indicates it was registered only two years ago, it raises a red flag.

• Entity Type Classification: This specifies the legal structure of the business (e.g., Limited Liability Company (LLC), Corporation, Partnership). Understanding the entity type is essential for legal and compliance purposes, as it dictates the rules and regulations governing the business.

Different business structures have varying levels of liability and regulatory requirements. Knowing the entity type ensures that the lender understands the legal framework within which the business operates and can assess the associated risks accordingly.

2. Registered Agent Information

• Registered Agent Name and Address: The registered agent is the designated point of contact for legal and official correspondence. Verifying this information ensures that there is a reliable channel for communication and legal notifications.

The registered agent acts as a crucial link between the business and the state. Accurate registered agent information ensures that important legal and compliance notices reach the appropriate party, reducing the risk of missed deadlines or legal issues.

3. Officer and Owner Details

• Officer Names and Titles: Access to the names and titles of key officers provides insights into the management structure of the business. This is valuable for assessing the experience and expertise of the leadership team. Availability: Officer information is available in 28 states.

Knowing the key officers and their roles helps lenders evaluate the competence and credibility of the management team. This assessment is crucial for determining the business's ability to execute its plans and manage its finances effectively.

4. Filing History and Amendments

• Historical Filings and Amendments: Reviewing past filings and amendments can reveal significant events in the business's history, such as changes in ownership, mergers, or legal disputes. This information provides a deeper understanding of the business's evolution and potential challenges.

Historical filings offer a transparent view of the business's past activities and any significant changes it has undergone. This historical context is invaluable for identifying potential risks and assessing the business's long-term stability.

5. Financial Obligations and Legal Standing

• UCC Filings: Access to UCC filings can reveal existing liens and financial obligations, providing a clearer picture of the business's financial health. This helps lenders assess the risk of extending additional credit. Availability: UCC filing data is available for 11 states, with plans for expansion.

UCC filings provide critical insights into a business's debt obligations and secured interests. This information helps lenders understand the business's existing financial commitments and assess its capacity to repay additional debt. 

Example: Identifying a significant number of UCC filings may indicate that the business is already heavily leveraged, increasing the risk of default.

• Court Records API: Access to court records, particularly in key jurisdictions like New York State and Miami-Dade County, can reveal pending lawsuits or judgments that could impact credit decisions. This helps lenders assess potential legal challenges facing the business.

Legal disputes can significantly impact a business's financial stability and operational viability. Access to court records allows lenders to identify potential legal risks and make informed decisions about extending credit.

6. Additional Verification Data

• TIN/EIN Verification: Verifying Tax Identification Numbers (TIN) against IRS records confirms business legitimacy and helps prevent identity theft. This ensures that the business is properly registered with tax authorities.

TIN verification is a crucial step in preventing fraud and ensuring that the business is operating legally. Matching the TIN with IRS records provides an additional layer of assurance that the business is legitimate and compliant with tax regulations.

• Contractor License Verification: For businesses in the construction industry, verifying contractor licenses at the state level ensures they are operating with the required credentials. This is essential for lenders to mitigate risks associated with unlicensed or non-compliant contractors.

Validating contractor licenses ensures that the business has met the necessary qualifications and is authorized to perform contracting work in the state. This reduces the risk of funding businesses that may face legal or regulatory issues due to non-compliance.

7. Primary Source Documents and Screenshots

• Official Documents: Access to official business documents, such as articles of incorporation or formation, provides verifiable proof of the business's legal establishment. These documents often contain valuable information about the business's structure and purpose. Availability: Business documents are available in 18 states.

Official documents serve as definitive evidence of the business's legal existence and its organizational structure. These documents can be used to validate key details about the business and ensure that it is operating in accordance with state regulations.

• Screenshots with Timestamps and Watermarks: Cobalt Intelligence offers the unique capability to obtain actual screenshots from state records, complete with timestamps and watermarks. This feature creates a verifiable audit trail for compliance and due diligence purposes.

Reasoning: Screenshots provide a visual record of the information obtained from the Secretary of State website at a specific point in time. The timestamps and watermarks add an extra layer of authentication, ensuring that the screenshots are genuine and unaltered.

Use cases:

• Fraud Prevention: Instantly identify inactive businesses or mismatched information to prevent funding potentially fraudulent entities.
• Compliance: Maintain verifiable audit trails with timestamps and watermarks for regulatory compliance.
• Enhanced Decision-Making: Access officer information, filing dates, and historical changes to make informed lending decisions.
• Efficient Verification: Automate manual processes, saving time and resources while improving accuracy.

Success Stories: Real-World Impact

The value of retrieving comprehensive data through Secretary of State APIs is reflected in the success stories of lenders who have integrated these solutions into their operations.

1. 1West: Streamlining Loan Applications

By integrating Cobalt Intelligence's SOS API, OneWest automated the verification of business start dates, ensuring accurate information and more competitive offers. The API also helped reduce fraud by verifying application data against official state records. 

"Cobalt helps us verify the file data that the customer provides on applications. It helps reduce fraud for our lending partners and ensures we have the highest chances of obtaining approvals," explains Kunal, CEO of 1West.

2. General Merchant Funding: Improving Underwriting Efficiency

General Merchant Funding enhanced its underwriting process by automating Secretary of State verification. This eliminated the manual, state-by-state verification process, saving minutes per application and ensuring they were dealing with verifiable businesses from the outset.

3. Bectran: Enhancing Credit Risk Management

Bectran integrated Cobalt Intelligence's API to automatically pull SOS data alongside credit applications. This allowed them to score applications based on verification data, provide screenshots for audit trails, and automatically decline inactive businesses, resulting in tighter fraud security measures and faster credit approvals.

Conclusion: Transforming Lending with Data-Driven Insights

Secretary of State APIs offer a wealth of data that can transform business verification for alternative lenders and institutional lending executives. By providing real-time access to core business information, registered agent details, officer and owner data, filing history, financial obligations, and legal standing, these APIs empower lenders to make more informed decisions, reduce fraud risk, and streamline operations.

The ability to access primary source documents and screenshots further enhances the credibility and reliability of the data, ensuring compliance and facilitating thorough due diligence. As the success stories of 1West, General Merchant Funding, and Bectran demonstrate, integrating SOS APIs into lending workflows can lead to significant improvements in efficiency, accuracy, and risk management.

Secretary of State APIs provide the tools and information needed to transform lending operations, enabling lenders to make faster, more accurate decisions and build a more secure and profitable business.

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