Executive Summary: Using court records for SBA lending helps 7(a) and 504 lenders perform the good-character and eligibility diligence that SBA loan-origination policy expects, because litigation and judgment signals speak directly to whether an applicant business meets program requirements.[1][2] This guide shows where business litigation data fits in SBA diligence, how to pull it for New York and Miami-Dade, and how to handle the broad coverage gaps honestly.
Why do court records matter for SBA diligence?
What does SBA policy expect?
SBA SOP 50 10 sets the loan-origination requirements for 7(a) and 504 lenders, including eligibility screening and character review of the applicant.[1] Business litigation and open judgments are part of the picture a lender builds when documenting that an applicant qualifies and that the file was underwritten with care.
A pending suit or an unpaid judgment does not automatically disqualify an applicant. It is a signal that the lender should document, weigh against the rest of the file, and route to the right level of review under its own credit policy. The point is consistency: the same litigation pattern should trigger the same review step on every file, so the diligence is repeatable and defensible if SBA or an auditor later asks how the conclusion was reached.
Why not rely on the application alone?
An SBA applicant may not surface every judgment, lien, or active suit against the business. Disclosure can be incomplete by oversight or by intent, and either way the gap sits inside a file the lender has to stand behind. A direct court-records search gives the lender an independent control that supports the diligence narrative and the audit trail SBA programs depend on, rather than resting the eligibility conclusion on the applicant's own summary.
For an SBA file, the goal is not only to make a sound credit decision. It is to be able to show, later, that the decision rested on more than the borrower's own account.
What court signals support character and eligibility review?
Which signals carry weight?
Open money judgments, repeated litigation as a defendant, and recent filings near the application date are the signals most worth documenting. A docketed money judgment can also attach as a lien to property, which connects litigation to collateral and recovery.[2]
How should signals be recorded?
Each signal should be captured with its source, the date pulled, and the rule that fired, so the SBA file shows what was searched and why a conclusion was reached. A clean search is worth recording too, because documenting that the venue was checked and nothing surfaced is itself part of a defensible diligence record.[3]
| Signal | Diligence action | Why it matters |
|---|---|---|
| No open judgment (supported venue) | Document clean search, continue | Supports the eligibility and character narrative |
| One resolved judgment | Note and continue | Resolved matter, limited bearing on the decision |
| Multiple open judgments | Escalate to manual review | Pattern relevant to character and repayment capacity |
| Recent litigation near application | Request explanation | New exposure the applicant may not have disclosed |
| Venue outside coverage | Fallback search | Broader SBA diligence needs more than two venues |
How does Cobalt return court data for SBA files?
What does the API call look like?
The Court Records API is asynchronous and callback-only. It requires `businessName`, `jurisdiction` (`newYork` or `miamiDade`), and a `callbackUrl`, and it searches by business name. Results arrive at the callback, usually within 30 to 120 seconds.
curl --location 'https://apigateway.cobaltintelligence.com/courtCases?businessName=Borrower%20Industries%20Inc&jurisdiction=miamiDade&callbackUrl=https%3A%2F%2Fyour-app.com%2Fcobalt-callback' \
--header 'x-api-key: YOUR_API_KEY' \
--header 'Accept: application/json'What comes back?
The response can include judgment details, case information, filing dates, parties involved, and judgment amounts where available. Amounts are not always present, so the file should record amount as unknown rather than assume zero.
What are the honest coverage limits for SBA lenders?
Where does Cobalt reach?
Cobalt's Court Records API covers New York State and Miami-Dade County, Florida only. For an SBA lender whose applicant operates or litigates in those venues, that is direct, useful coverage. For applicants elsewhere, it is one input, not the whole diligence picture.
What must come from other sources?
The API does not query PACER, federal courts, or bankruptcy filings, and it does not cover other states. PACER is the federal court baseline and remains relevant SBA context, but it is not Cobalt coverage.[4] The large majority of cases are handled across thousands of state venues, so a national SBA diligence program needs additional sources beyond any two-venue API.[5] For asset-level claims, pair court data with a lien search; see the pre-funding UCC lien search underwriter workflow.
How should SBA lenders use court data responsibly?
What does FCRA restrict?
When court or judgment data informs a credit decision, FCRA obligations can attach. Civil judgments that antedate a report by more than seven years, or until the governing statute of limitations runs, whichever is longer, are restricted from consumer reports.[6] Set policy on stale judgments with counsel.
Why is the lender the decision owner?
Cobalt is a data source, not a decisioning engine. SBA eligibility and character determinations belong to the lender under SOP 50 10; Cobalt supplies the litigation and judgment data the lender weighs.[1] For the sanctions layer of the same file, see BSA/AML for alternative lenders and OFAC's role.
What implementation checklist should SBA teams use?
What should the first version include?
1. Confirm the legal business name and active status.
2. Identify whether the applicant's venue is New York or Miami-Dade.
3. Call `GET /courtCases` with business name, jurisdiction, and callback URL.
4. Document judgment count, amounts where available, dates, and parties.
5. Route open or recent matters to manual review under SBA credit policy.
6. Store the raw response, parsed flags, timestamp, and reviewer notes for the file.
7. Send any venue outside coverage to a documented fallback, never a silent clear.
How can an SBA lender start adding court-records data?
Start with applicants who operate in New York or Miami-Dade, where the business-name lookup gives direct litigation and judgment signals for the file. To walk through the call, the returned fields, and how the output fits an SBA diligence record, book a Cobalt demo with a few business names you want to screen.
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