Questions owners actually ask
Can you get business funding with a tax lien or a judgment?
Often yes. A payment plan changes almost everything, and an unaddressed lien changes almost nothing in your favour.
Neither one is an automatic decline at most revenue-based funders. What decides it is whether the debt is being handled, how big it is next to your revenue, and who is standing in front of the funder in line.
Tax liens
A federal or state tax lien attaches to your assets and, critically, generally takes priority over a later commercial creditor. That is the funder's actual concern: not that you owed tax, but that the government is ahead of them.
What turns it around:
- A formal payment plan, in place and current. An IRS installment agreement with a few months of on-time payments changes the conversation completely. Bring the agreement letter and proof of payments.
- Size relative to revenue. A $9,000 lien against $90,000 a month in deposits is noise. A $200,000 lien against the same revenue is not.
- Age and direction. A balance that is shrinking reads entirely differently from one that is growing.
Without a plan, an open lien of any real size is a hard conversation at most funders.
Judgments
A judgment means somebody sued and won. Underwriters look at what it was about more than the number:
- A vendor or landlord dispute, settled or on a plan, is usually workable.
- A judgment from another funder is the worst case. It says you defaulted on exactly this kind of obligation, and it will close most doors regardless of your current numbers.
- A satisfied judgment with the satisfaction filed is close to a non-issue. Get the filing and bring it.
What to do before you apply
- Disclose it. It is public record and it will be found. Volunteering it costs nothing; being caught omitting it costs the file.
- Get on a plan if you are not on one. This is the single highest-value action available to you here.
- Gather the paper. The agreement, the payment history, any satisfaction or release.
- Write one paragraph explaining what happened and what you did about it. Underwriters read these, and a clear account of a bad period is far better than silence.
None of this is unusual. A meaningful share of funded businesses have something like this behind them. It is the handled ones that get funded. See also why applications actually get declined.
Questions owners ask
Does the funder pay off my lien?
Not normally. Some will require part of the proceeds go toward it, or want the plan documented before funding.
Will a lien show up if I do not mention it?
Yes. Liens and judgments are public record and are pulled as standard.
Does a satisfied judgment still hurt?
Much less, and often not at all once the satisfaction is filed. Bring the filed document rather than expecting them to find it.
Related
- Will applying hurt my credit?
- What is a factor rate?
- What lenders see in your bank statements
- Funding with an existing MCA
- Why was I declined?
- How much can I borrow?
- How fast can I get funded?
- What documents do I need?
- What credit score do I need?
- Can they take my house?
- What is a UCC filing?
- Can I pay off an MCA early?
- What if I miss a payment?
- Under a year in business?
- What is a holdback rate?
- Is my industry restricted?
- What does a broker charge?
- Why 3 different offers?
- Do I need collateral?
- Will they call my customers?
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General information, not financial or legal advice. Terms vary by lender and business.