How BayFirst National Bank Saves Time with Tax Guard Published June 15, 2023

Errors and delays threaten struggling small businesses 

BayFirst National Bank, headquartered in St. Petersburg, Florida, has had its sights set on becoming the premier bank of the Tampa Bay area since 1999. The bank has grown from an independent community bank to a top nationwide SBA lender with a team of more than 200 residential mortgage originators. Recently, many small businesses with thin credit profiles have needed funding as soon as possible to survive. BayFirst was looking to rise to the occasion and confidently offer rapid assistance to as many borrowers as possible. 

To reach this goal, BayFirst had to find a better underwriting solution with faster turnaround times for tax transcripts from the IRS and access to more thorough information.

“Using our previous vendor meant waiting seven to ten days for a transcript,” said Kevin Nguyen, Loan Documentation Specialist at BayFirst Bank. “That turnaround time was unacceptable because it delayed the loan closing.” 

To make matters worse, if the IRS sees even the simplest, smallest error on a tax transcript request form, it rejects the request. Tax transcript requests through Form 4506-C, the request form previously used by BayFirst, experience a 30%-40% rejection rate due to common, easily overlooked mistakes, including omission of tax year information or the borrower’s address, mailbox number, or TIN. 

The IRS doesn’t include any information about the error when they reject Form 4506-C. BayFirst frequently spent valuable time and resources contacting the borrowers to correct the mistakes and sign new forms. 

While the clock is running out for so many small businesses in dire need of assistance, thin credit files further complicate underwriting decisions. That’s right: tax transcripts alone don’t give a complete picture of a small business’ financial health. Form 4506-C provides access to specific information only for borrower-requested tax years and forms. When lenders don’t have a holistic view of a potential borrower’s financial situation, it’s impossible to lend confidently. 

The solution? A faster, more straightforward, in-depth underwriting process 

To solve these issues, BayFirst enlisted Tax Guard.

Tax Guard uses IRS Form 8821 (“Tax Information Authorization” form), not Form 4506-C. Form 8821 makes it simpler for tax professionals to request information from multiple tax forms simultaneously. It also provides exclusive third-party access to comprehensive federal tax compliance data over the past decade. 

Compared to the finicky Form 4506-C, filling out Form 8821 with Tax Guard is intuitive, with a rejection rate of only 5% and no rejection costs. If you receive a rejection, you’ll know why your request was rejected and how to resubmit confidently. Instead of waiting weeks to hear back from the IRS, Tax Guard can share data in as little as four hours. 

 “Tax Guard has simplified the tax transcript request process,” said Kevin. “Now, we log into Tax Guard and create an 8821 form, which authorizes Tax Guard to request the tax transcript. Then we enter the borrower’s Social Security number, and Tax Guard gets the transcript back to us the same day or the next day.” Additionally, the tax transcript request is no longer delayed by minor errors. “Getting even the title of a business owner wrong used to hold up the process,” said Kevin. “Now, we don’t see those errors anymore.” BayFirst is now closing loans faster and making its customers happier.

Plus, access to federal tax data via Form 8821 enables lenders to thoroughly examine a wealth of information, including payment and cash flow history and payroll tax deposit records, that are strong indicators of a business’s overall financial health. Look past thin credit profiles and lend with confidence. 

A better solution for banks and small businesses 

Only Tax Guard and Form 8821 give lenders real-time access to data that accurately reflects a small business’ financial well-being. Lenders are empowered to make better, data-based decisions and can choose to work with borrowers who are most likely to repay a loan.  

Thanks to Tax Guard, BayFirst’s ability to quickly and accurately process loans has not only made its borrowers happy and kept the bank thriving. “Because we’re getting tax transcripts back so quickly, we’re examining our processes and challenging ourselves to speed up how we handle loans,” said Kevin. 

At Tax Guard, we specialize in meeting the interconnected needs of both small businesses and their funding partners. With Tax Guard and Form 8821, you, too, can benefit from the assistance of a customer success manager assigned to optimize your account. Put a smile on your borrower’s faces and get them the capital they need faster than expected.

To read the full BayFirst case study and learn how we’ve helped thousands of other lenders like you, check out the Tax Guard Resources page.

Posted By: David Bohrman

As the VP of Marketing, David is responsible for driving overall marketing strategy for Tax Guard including brand positioning, go-to-market execution, and lead generation programs. For the past 15 years, David has held senior positions in early growth and mature companies, leading marketing, operations, and business development teams. Prior to Tax Guard, David was the Director of Marketing of one of the largest tax consulting firms in the country. He holds a B.A. in English and Philosophy from the University of Vermont.