The current State budget cycle ends on June 30. It is unclear whether the Governor and Republican lawmakers will find common ground for even a short-term fix. Many of us rely heavily on the Secretary of State’s (SOS)office to conduct business. The current talk is that the SOS will not receive special funding to stay open, but will simply close during any broader government shutdown, at least until it is time for the Minnesota State Universities to open. Even a short closure will cause disruption for our business clients, and when it ends, there is likely to be a backlog that will continue to interfere with timely transactions. For lenders who are processing loans to close in July, a little advance preparation could make a world of difference. Prior to June 30, take the following steps:
- Conduct all UCC searches that might possibly be needed for pending transactions.
- Make all necessary UCC filings well before June 30 so you can get file stamped copies back – we can provide you with a form for Borrowers to sign giving consent for filing a financing statement in advance of loan closing.
- Get certified copies of all Articles of Organization/Incorporation and related SOS filings for the Borrower, owners/partners/members of the Borrower who are entities, and for any Guarantors.
- Obtain Good Standing Certificates for all entities involved in the transaction (see item #3 above).
The shutdown may still be averted. If it is, there is no harm in obtaining the due diligence early. If it isn’t, wouldn’t you rather start off the Third Quarter closing a new transaction, rather than being the victim of the legislative impasse?