Beneficial ownership regime's demise removes tool for banks

Recent shifts in Treasury Department policy mean that a centralized federal database of business owners will no longer be accessible to private lenders. Originally, banks and consumer financing companies hoped this 'beneficial ownership' database would simplify the process of verifying who owns a business. This would have made it much faster for lenders to approve new merchant partners. Now, that responsibility falls back entirely on the lenders and the merchants themselves. For retailers and operators, this means the 'onboarding' process to offer new financing programs will not be getting any easier. You should expect lenders to continue asking for detailed personal documentation, such as driver’s licenses and Social Security numbers of all major stakeholders, whenever you apply to offer a new credit product. The 'Know Your Customer' (KYC) requirements remain strict. Lenders are now forced to use third-party verification tools or manual reviews, which can lead to longer wait times for your business to get approved to offer financing to your customers. If you are planning to switch financing providers or add a second-look lender, start the application process earlier than expected to account for these manual verification hurdles.

Source: American Banker — Top News

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