A bill that makes life a little easier for business owners passed in the Alabama Legislature.
Senate Bill 243, sponsored by NFIB member Sen. Arthur Orr and strongly supported by NFIB/Alabama, simplifies the procedure of applying for business financing. Currently, when a business owner is seeking financing, they must obtain a Certificate of Good Standing, which shows that he or she has paid the Alabama Business Privilege Tax. SB 243 replaces the Certificate of Good Standing with the Certificate of Compliance, which verifies that a business owner is up-to-date on the payment of all taxes due.
“If you are a business owner applying for financing, starting another business, buying equipment, and so on, the lending institution requires a Certificate of Good Standing to complete the financial transaction,” explains Rosemary Elebash, NFIB’s Alabama state director. “Only Alabama institutions will accept the Certificate of Good Standing. Since many major banking institutions have only branches in Alabama, and you have business owners shopping with out-of-state institutions for better rates, those institutions do not accept the Certificate of Good Standing.”
Therefore, NFIB/Alabama’s Tax Advisory Committee recommended the replacement. The Certificate of Compliance is commonly used and accepted by most banking institutions, so this move would result in reduced paperwork and time spent for business owners seeking financing, Elebash says.
SB 243 passed the Senate in May and the House in June.