Glossary
Stipulations
Stipulations, or stips, are documents, verifications, or conditions that a funding partner requires before final approval or funding.
Stipulations, commonly called stips, are documents, verifications, or conditions that a funding partner requires before final approval or funding. A conditional approval may state an amount and proposed structure while remaining subject to bank statements, insurance, equipment verification, lien resolution, identity documents, or other specific requirements.
Key takeaways
- Conditional approval is not final funding.
- Each stip should identify what is required and why.
- New information can create additional stips or change the decision.
- Missing or inconsistent documents are common causes of delay.
- Complete the difficult conditions, such as insurance or lien payoff, early.
Common equipment-financing stips
Business and owner
- Formation documents
- EIN confirmation
- Business license
- Government-issued identification
- Ownership verification
- Personal financial statement
- Tax returns
- Updated bank statements
- Credit explanation
- Proof of address
Equipment and seller
- Final invoice
- Serial number
- Equipment photos
- Inspection
- Appraisal
- Maintenance records
- Seller verification
- Ownership evidence
- Payoff statement
- Lien release
- Deposit receipt
Closing
- Proof of down payment
- Insurance certificate
- Lender loss-payee endorsement
- Voided business check
- Signed agreement
- Personal guarantee
- ACH authorization
- Delivery and acceptance certificate
- UCC payoff, release, or subordination
Example stip sheet
Approval amount: $82,500 Term: Subject to final documents Conditions: 1. Complete March through June business bank statements 2. Final dealer invoice with serial number 3. Proof of $10,000 cash contribution 4. Insurance naming funding partner as lender loss payee 5. Verification of business ownership 6. Satisfactory UCC search
This is not a commitment to fund until the funding partner confirms the conditions are satisfied.
Why stips are requested
A stip usually resolves an unanswered underwriting question:
- Is the cash contribution available?
- Does the equipment exist?
- Does the seller own it?
- Is another creditor claiming the asset?
- Is the business information accurate?
- Is the asset insured?
- Did a material fact change since the application?
- Does the final invoice match the approved request?
How stips delay closing
Delays often occur when:
- Documents arrive in separate, unlabeled emails
- Bank statements are incomplete
- The quote changes after approval
- Insurance is requested too late
- The seller does not cooperate
- A UCC filing requires payoff or subordination
- Names or addresses do not match
- A serial number is missing or incorrect
- New debt appears before funding
Real-world example
A contractor receives conditional approval for a used excavator. The UCC search shows an existing blanket lien from the contractor’s bank.
The funding partner may require a subordination, waiver, or confirmation that its equipment lien will have acceptable priority. Until that issue is resolved, the approval cannot fund.
Frequently asked questions
- Can stips change after approval?
- Yes. New information, an updated report, equipment change, or expired document can create new conditions.
- Is a conditional approval guaranteed?
- No. It depends on satisfying the stated conditions and any final review.
- Who decides whether a stip is cleared?
- The funding partner or its authorized closing team.
- Should I buy the equipment before stips are cleared?
- Avoid nonrefundable commitments unless the financing and purchase risks are understood. Auction and private-sale deadlines require particular care.