There are a variety of credit repair agencies available. See credit score section in Advisor Loan-ology Qualification section.

When an advisor has a tax lien or judgement, it is almost always this is listed as a FINRA disclosure. Public records such as tax liens, judgments, bankruptcies, foreclosures not reporting on credit report will be discovered because all lenders complete a third party national public records search through Lexis Nexis, Data Verify or other third party public search companies.

If there are tax liens and judgments that have been already paid, and there is a good explanation as to why they occurred in the first place, we can almost always work around this. A paid or released tax lien can remain on your credit file for seven years from the date released or ten years from the date filed. Unpaid or unreleased tax liens remain on file for ten years from the file date.

Tax liens and judgments that have a current balance and are still outstanding have to be resolved. Tax liens are one of the few FINRA disclosures that can be expunged from BrokerCheck®. There are a handful of lawyers and FINRA expungement service firms who can help you resolve tax lien issues and then get expunged from FINRA. In fact, for advisors, there are cases where resolution vendors can get a tax lien released from the IRS without having to pay off the tax lien as long as a settlement is in place.

Most conventional and SBA lenders will not lend to an advisor with a current tax lien and they also will not lend to an advisor to pay off a tax lien. However, there are SBA lenders who will be okay with a current tax lien if it is on a payment plan.

The SBA does allow for a federal (not state) tax lien settlement payoff loan as a legitimate loan purpose. If you have an IRS tax lien, have a settlement plan, and have been making your payments on time, the SBA program allows for a loan to pay off the IRS settlement.

The problem is that while allowable by the SBA, many SBA lenders will refuse to offer this specific loan type based on their own internal bank policies. Fortunately, we have SBA lenders willing to do these types of loans.

AdvisorLoans has lenders who we can get loans approved even with a previous BK. This is a case-by-case basis but we have had good success in overcoming this obstacle.

As would be expected, lenders scrutinize a Financial Advisor that has a prior bankruptcy more than borrowers from other professions. However, it is a myth that it is impossible for all advisors with a previous bankruptcy to qualify for a loan.

For an advisor who declared bankruptcy in the couple of years…we likely can’t help. Some lenders will simply not lend to anyone with a prior bankruptcy, but there are lenders who will make exceptions or have scenarios that will allow for lending to previous BK advisors.

Prior bankruptcy scenarios that we may be able to work around:

• If the BK is older than 10 years for some lenders.

• If the BK is older than 7 years for some lenders.

• If the BK is older than 5 years for SBA lenders.

• If the BK happened when the advisor wasn’t an advisor. For example, you were in a different occupation when you had the BK and that event led you to becoming an advisor afterwards.

• The reasons behind the BK are important. Was it caused by a nasty divorce? Was it from a business venture in a different profession that went bust? Was there a serious health issue?

In all cases, if you have a prior bankruptcy a detailed letter of explanation will be required and this is something that should be prepared at the very beginning of the process so your Loan Advisor can have all the needed information (without surprises) in order to best advise you on your options and if we can be of any help.

Character is one of the 5 C’s of credit eligibility. The issue of character covers a few different areas including your credit report, credit history, and personal background. These include your management ability and skillset, if there is a criminal record, prior bankruptcy or short sales, multiple or open FINRA disclosures, or existing tax liens.

The SBA has specific rules on “character” in their operating procedures that lenders must follow. The SBA requires that not only the borrower pass the “character test” but that also any general partner, officer, director, managing member of a limited liability company (LLC), owner of 20% or more of the equity of the Applicant, Trustor (if the Applicant is owned by a trust), and any person hired by the Applicant to manage day-to-day operations (“Subject Individual”) must be of good character.

If a character determination issue arises then the SBA does not allow for the subject individual to reduce his/her ownership in an Applicant within 6 months prior to the date of the application for the purpose of avoiding rule compliance. The only exception to the 6-month rule is when a Subject Individual completely divests his/her interest prior to the date of application. Complete divestiture includes divestiture of all ownership interest and severance of any relationship with the Applicant (and any associated Eligible Passive Company) in any capacity, including being an employee (paid, unpaid, or contracted).

The SBA also prohibits lenders from providing SBA loans to businesses with Associates who are:

Incarcerated, on probation, or on parole (an individual with a deferred prosecution, conditional discharge, order of protection, or who is on a sex offender registry is treated as if the individual is on probation or parole).

Currently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction.

In general, neither SBA or conventional lenders care if a borrower was arrested for minor offenses 20 years ago. Even certain felonies can be overcome if enough time has passed for some lenders. However, when it comes to prior arrests and criminal records there are a few obvious policies that all lenders will have but most of the time it is grey area nuance that each lender will have a different perspective on.

If you committed any felony in the last 10 years, or have multiple misdemeanors in the last 5 years, or if you have had two DUIs in the last couple of years, it is going to be very difficult to get qualified for a loan. However, it is technically the SBA’s decision and they have approved some of these situations.

Banks get very cautious when there is any arrest and criminal activity history with a borrower. If there are multiple offenses, very recent arrests, or a pattern of this kind of activity, banks will not move forward on the loan.

If you have been charged with a crime and received sentencing or other conditions the judge imposed, and the sentencing and other conditions of the court have not been satisfied then you would not be eligible for a conventional or SBA loan.

As a general rule, borrowers with a criminal record will have a better chance of getting an SBA loan approved than a conventional loan. The drawback is that there is specific paperwork required to over come this obstacle and not every borrower has records on hand.

FINRA Disclosures & Settlements

All lenders with a concentrated focus on advisor lending will go online and review the free version of your BrokerCheck® report. Denied disclosures and settlements for smaller amounts are typically overlooked if there are not too many and most all are close, or over, ten years old.

However, if you have recent settlements and client complaints and especially if those were larger amounts, even over $50,000 and they were settled in the last few years, lenders take pause.

If you have an open settlement issue that is still pending, it is very difficult to get a loan approval until the open issue is resolved. Tax liens and judgements are frowned on by lenders. If you are in any of these scenarios, a detailed letter of explanation should be created for the lender and our Loan Advisor will review and make inquiries to see if we can overcome these FINRA disclosure challenges.

How banks generally view FINRA disclosures

Banks review the advisor’s BrokerCheck report for disclosure eligibility. To pass BrokerCheck eligibility without further explanations required, the report must show the advisor has no disclosures that were not dismissed.

Denied disclosures are like they didn’t happen

Denied Disclosures - client complaint based disclosures where FINRA found no wrong doing on behalf of the advisor and a settlement amount was not paid.

Typically allowable disclosures:

Settlement disclosures over 10 years old – If there are no more than 3 settlement disclosures whose combined settlement sum is less than $100,000 AND all three disclosures are older than ten years AND there has not been a settlement disclosure within the last 10 years.

Settlement disclosures within last 10 years – If there are no more than 3 settlement disclosures within the last 10 years AND the combined settlement sum is less than $25,000.

Typically not eligible disclosures:

Current open or pending disclosures that may result in unknown pending damages the advisor may be required to pay.

Borrowers with criminal disclosures or a bankruptcy within the last 10 years.

Borrower with a single paid settlement disclosure over $100,0000 within the last 5 years.

Borrowers with “bad faith” disclosures where FINRA found the advisor defrauded or intentionally harmed their clients.

Borrowers barred from FINRA.

Borrowers who have a termination disclosure within the last 2 years.