Glossary

What is Know Your Business (KYB)?

Know Your Business (KYB) is the process of verifying a business's legal identity, ownership structure, and beneficial owners before entering a financial relationship. It is a due-diligence requirement under Bank Secrecy Act/AML rules for covered institutions and a standard underwriting practice for non-bank lenders evaluating business creditworthiness.

What KYB involves

KYB checks typically cover: confirming the business is registered and in good standing (secretary of state filings), identifying beneficial owners (under FinCEN's Beneficial Ownership Rule), verifying the principal(s) are who they claim to be, and screening against sanctions and watchlists.

For non-bank MCA and equipment funders, KYB also overlaps with fraud prevention — confirming the business actually exists, has real operations, and matches the bank statements provided.

KYB vs KYC

KYC (Know Your Customer) applies to individuals; KYB applies to business entities but typically includes KYC checks on beneficial owners and key principals. In SMB lending, both run in parallel during underwriting.

FAQ

Know Your Business (KYB) — common questions

Is KYB required for MCA funders?

Formal BSA/AML KYB rules apply to regulated financial institutions. Non-bank MCA funders are not always directly subject to the same rules, but KYB is still standard practice for fraud prevention and underwriting integrity — and regulatory reach is expanding.

What documents are typically collected for KYB?

Common KYB documents include: articles of incorporation or state registration, EIN confirmation, ownership structure, government-issued ID for principals, and sometimes operating agreements or licenses.

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