I recently applied for a loan through my business for healthcare equipment, but the bank's underwriter is stating that the TN Secretary of State is not showing the business as 'Active'. The current status is 'Inactive - Dissolved (Administrative)' because the TN Secretary of State requires a 'Reinstate the Business Process'. This process involves paying all taxes, penalties, and interest to the Dept of Revenue, obtaining a 'letter of clearance' from the Dept of Revenue, and paying a filing fee of $300 per year for every year, plus additional fees for backdated years and a reinstatement fee. The bank is basing the loan on the business's income, and I'm considering closing the loan as a sole proprietor if the business does not show active. Are there TN state laws and statutes that require a bank to observe an 'Active' status for an LLC or any other business before closing on a loan? Is the Secretary of State's requirement for reinstatement unethical or enforceable? Are there any workarounds to get the loan closed? What is the nature of the $300 annual filing fee with the TN Secretary of State, and does the Sec. of State have the right to demand payment of any back filing fees even if all the taxes were paid and returns filed with the TN Dept of Revenue?

March 25th, 2023

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