How to check a lender or broker before you sign anything
Five checks take about ten minutes and cost nothing. Confirm who actually funds the money, look the company up in the public licensing registry, search your state UCC records, read what the contract calls the product, and find the paragraph that says what happens when a payment fails.
None of them requires an attorney. All of them are things the company you are talking to can answer or show you in writing, which is itself the point: an outfit that cannot supply them is telling you something useful before you ever sign.
1. Ask who actually funds the money
Direct funder, or broker placing the deal with a partner? Both are legitimate, and the difference matters at three moments: when the file is approved, when something goes wrong, and when you want to change a payment.
| Question | Why the answer matters |
|---|---|
| Does this company fund from its own balance sheet? | Determines who actually decides the terms, and who you call in month three |
| If it is a broker, which funders does it place with, and how many? | A short panel narrows your options; a long one may mean your file was shopped widely |
| Who signs the contract — this company or another entity? | If the name on the contract differs from the name on the pitch, ask why |
| Who collects the payment, and who do I notify if revenue falls? | You want the party with authority to adjust, not a message relay |
Get that in writing, even as a one-line email answer. A broker answering “we place with a panel, here it is” is a good sign. A refusal to say is not.
2. Look the company up in the public registry
NMLS Consumer Access is the public registry for companies and individuals licensed or registered through the Nationwide Multistate Licensing System. It covers many non-bank lenders, brokers and finance companies, and it shows licence status and history by state.
Two honest caveats. First, not every commercial funding product is licensed through NMLS, so an absence is a question, not a verdict: ask what the company is regulated as and who its regulator is. Second, the registry tells you a company exists and is in good standing — it does not tell you whether the terms are fair. It is a floor, not a rating.
If the company is based in a state where it needs a licence to broker or lend, the state regulator’s own lookup is worth a second search. Ten seconds of cross-checking catches most of the nonsense.
3. Search your state’s UCC records
Your Secretary of State’s UCC search shows financing statements filed against your business — who has registered a security interest, in what, and when.
Do the search on your own entity before you sign anything. Two reasons:
- You see the existing claims. If a lender already has a blanket lien on receivables, a new advance is stacking on top of it, and the new funder either knows or should.
- You see what gets filed. After funding, the new creditor’s UCC-1 will appear. If the collateral description is broader than what you agreed to, you want to know that while you still have leverage.
A UCC filing is not a red flag in itself. An unexplained one is.
4. Read what the contract calls the product
A merchant cash advance is a purchase of future receivables. A loan is a loan. They are different agreements, with different disclosure requirements, different remedies and different tax and accounting treatment.
Read the first page and find the sentence that says what this is. Then check that the description matches what the salesperson described. Mismatches here are the ones that matter later:
| What the contract says | What to check |
|---|---|
| “Purchase of future receivables” | Whether the remittance can adjust with revenue, and what reconciliation exists |
| “Loan” or “note” | The stated rate, the amortisation, and any prepayment terms |
| “Sale of receivables” with a personal guarantee | The guarantee’s scope, and whether it is capped |
| A clause naming a confession of judgment or cognovit | Ask a lawyer in your state what it means before you sign it — do not take a salesperson’s description |
That last row is the one people skip. If you do not recognise a clause, the correct move is to have someone who does read it, not to accept a verbal explanation.
5. Find the missed-payment paragraph
Before you sign, locate the language covering a failed collection. It usually contains all of the following, and the specifics are where agreements differ most:
- The returned-payment or NSF fee, per occurrence.
- Whether the payment is re-presented automatically, and how soon.
- What counts as an event of default — one missed pull, or a pattern.
- Whether default accelerates the remaining balance.
- What notice you get, and how.
Also find the early-payoff clause while you are there, and the reconciliation clause if the product has one. Those three paragraphs — missed payment, early payoff, reconciliation — decide how the agreement behaves in the two years you will live with it.
The red-flag table
| Signal | Why it is a problem |
|---|---|
| “You have to sign today, the rate changes tomorrow” | Real pricing does not expire in an afternoon; the deadline is a sales device |
| No total repayment figure in writing | You cannot check arithmetic you were never given |
| Vague answer on who funds the deal | You do not know who your counterparty is |
| An upfront fee before any paperwork | Fees belong in closing documents, not in a payment link |
| Cannot take the contract away to read | A contract you cannot read in your own time is a contract you cannot check |
| Coaching to inflate revenue on the application | That is your signature on a false statement, not theirs |
| No phone number that reaches a human after funding | The relationship continues after the wire clears |
What to keep in a file
One folder, before and after signing: the term sheet, the signed agreement, the UCC filing confirmation, the payment schedule, and the name and direct line of the person who can adjust a payment. If a dispute ever happens, that folder is the whole argument.
Where Falcon fits
Falcon Equity Group works with businesses that banks often turn down, which is exactly why this article is worth publishing: the checks above are the ones we expect to pass. Products run from $5,000 to $20M, several fund same-day or within 24–48 hours of approval, and the full terms for a specific file are set out in the agreement, not on the marketing page. If you want the paperwork for a specific amount, start an application and ask for the total repayment in dollars — we will put it in writing.
Get Funding Today
If you want a straight answer on what a specific amount would cost you, start an application. You can also review the full product list or size a payment with the loan calculator. Falcon Equity Group has been in business 15 years, has helped 300+ businesses and deployed $100M+, with funding from $5,000 to $20M and many products funding within 24–48 hours of approval.
This article is for general information only and is not financial, legal or tax advice. Registry and filing details vary by state; confirm them directly with the relevant authority. All funding is subject to approval, and approval is not guaranteed.
Frequently asked questions
How do I tell whether a company is a direct lender or a broker?
Ask directly and get it in writing: does this company fund from its own balance sheet, or does it place the deal with a funding partner? Both are legitimate, but the answer changes who approves the file, who you call when something goes wrong, and whether the terms you see on the term sheet are the terms you sign.
What is NMLS Consumer Access and does it cover business funders?
NMLS Consumer Access is the public registry for companies and individuals licensed or registered in the Nationwide Multistate Licensing System, which covers many non-bank lenders, brokers and mortgage companies. It is a useful first check, not a complete one: some commercial funding products are not licensed through NMLS at all, so if a company is not listed, ask what it is regulated as and by whom rather than assuming.
What does a UCC filing tell me?
A UCC-1 financing statement on your business tells you that a creditor has registered a security interest in your assets or receivables. Your state Secretary of State search will show who has filed, when, and against what collateral. It is the fastest way to see whether a lender already has a claim that a new offer would stack on top of.
Which clause should I read first in a funding agreement?
The one covering a missed payment. It usually sets out returned-payment fees, whether a re-presentment happens automatically, what counts as an event of default, and whether the balance can be accelerated. That single paragraph tells you more about how the relationship will behave than the marketing page does.
What are the red flags in a funding offer?
Pressure to sign the same day, no written total repayment figure, an unclear answer on who funds the deal, a request for an upfront fee before any paperwork, a contract you cannot take away to read, and coaching to overstate revenue. Any one of those is a reason to slow down.