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Data security is essential when applying for a business loan, especially when you do so through online lenders and platforms like Clarify.
A lot of people who are interested in applying to online lenders are understandably worried about entering things like Social Security numbers, tax returns, bank statements, financial statements, and business revenue to a digital platform. Identity theft, fraud, and lending scams are unfortunately very real and increasingly common threats.
At Clarify, we pride ourselves on making the safety, privacy, and comfort of our clients a priority. But we don't expect you to trust us just because we say so. That's why I want to show you exactly how we handle your sensitive data so you can make an assessment for yourself.
The Information We Collect at Clarify and Why We Need It
At Clarify, we try to keep our initial application process very simple and short. But, like any legitimate lender, we need certain information to be able to assess your business's financing eligibility.
| What we ask for | Why we need it |
|---|---|
| Personal information (name, SSN, contact info) | We use these to verify your identity and perform credit checks |
| Business financial data (bank statements, tax returns, revenue) | Having this information helps us determine what loans you are eligible for and how large a loan you're able to reasonably get |
| Credit report data | We need to know your credit score (even sometimes without a hard pull) so we can assess your creditworthiness and determine potential loan terms/rates |
| Other business details (EIN, time in business, entity type, licenses, registration) | We use this to help determine which types of financing you may be eligible for |
We also may use the information you enter when you register, make a purchase, sign up for our newsletter, respond to a survey or marketing communication, surf the website, or use certain other site features to send periodic emails about products and services and/or follow up after a live chat, email, or phone inquiry.
How Clarify Protects Your Data
There's nothing more important to me than having our clients feel at ease when working with Clarify. I know it's intimidating to share sensitive personal and financial information. We take the responsibility very seriously by using multiple layers of technical safeguards to protect your information from being accessed by anyone other than you and us during the application process.
These are the data security practices we are committed to at Clarify. If you want to know more about how we protect our clients, you can also check out Clarify's privacy policy page.
Service Organization Control 2 (SOC 2) Security Principles
We follow Service Organization Control 2 (SOC 2) security principles designed around five major trust categories: security, availability, processing integrity, confidentiality, and privacy.
| SOC 2 trust principle | How Clarify applies it |
|---|---|
| Security | We use encrypted systems, secure access controls, HTTPS-secured application portals, and internal monitoring practices designed to help prevent unauthorized access to borrower information. |
| Availability | Our systems and application infrastructure are designed to remain accessible and operational so borrowers can securely submit and manage financing applications. |
| Processing integrity | We use standardized application and underwriting workflows designed to help maintain accurate processing and reduce errors during document handling and loan evaluation. |
| Confidentiality | Sensitive borrower information is restricted to authorized personnel who need access for underwriting, servicing, compliance, or support purposes. |
| Privacy | We explain how borrower information is collected, used, stored, and shared through our privacy practices and internal data-handling policies. |
Encryption and Secure Data Transmission
Encryption is a digital security method that randomly scrambles data to outsiders in order to conceal it. We use encryption during information uploading, transmission, and in our information storage to reduce the risk of any unauthorized access. Here are some examples of how we use it:
TLS encryption for data that's being transmitted through our application platform
AES-256 encryption is used for sensitive data being stored
HTTPS-secured application pages with SSL protections
Controlled Access to Borrower Information
Only specific Clarify employees can see your information when you submit an application. Those people are authorized staffers who need the information for underwriting, customer support, compliance reviews, fraud prevention, or other servicing activities.
On top of that exclusive access, we have strict internal disclosure policies for all employees designed to prevent unnecessary exposure to sensitive records.
Multi-Factor Authentication
Multi-factor authentication is a digital security strategy, usually used for logins to certain platforms or portals, that requires additional steps (beyond a username and password) to verify a person is who they say they are before granting access to the platform or portal. We use multi-factor authentication in certain internal systems to ensure that only authorized users can view your information.
Internal Security Practices
Clarify maintains ongoing monitoring practices, security reviews, employee security awareness training, and vulnerability assessments to help spot potential risks and maintain security standards over time.
Unlike some other financial platforms, at Clarify, we do NOT:
Sell your personal data
Share your information with unrelated third parties for marketing purposes
Retain records or storage of your data for longer than necessary (see the next section for more details on this)
Secure Vendor and Third-Party Standards
Like most financial services platforms, we use third-party providers to support infrastructure, analytics, communications, and application processing.
We evaluate the third-party services we work with very carefully, including how they handle sensitive information and maintain appropriate security and confidentiality standards. That includes making sure personal information is stored behind secured networks, sensitive credit information is encrypted through Secure Socket Layer (SSL) technology, and access to borrower information is restricted to authorized individuals with special access rights.
The Regulations That Protect Borrowers
Just because you choose to use an online lender doesn't mean you're on your own legally. All lenders are subject to multiple federal and state regulations designed to help protect sensitive borrower information, require transparency, and reduce unfair or deceptive practices.
| Gramm-Leach-Bliley Act (GLBA) | Requires financial institutions to help protect sensitive financial information and explain how customer data is collected, shared, and stored. |
|---|---|
| State privacy and data protection laws | Some states impose additional requirements related to data privacy, breach notifications, and consumer protections for online financial services. |
| Federal Trade Commission safeguards rule | Requires lenders and financial companies to develop, maintain, and regularly review information security programs designed to protect customer data. |
| Credit report dispute rights | Gives consumers the right to dispute inaccurate information on their credit reports through the major credit bureaus. To make or view formal complaints against online lenders, you can go to the Consumer Financial Protection Bureau (CFPB) website. |
Ways To Protect Yourself When Applying Online
Every online lender is different, and there are specific things you need to check before applying on their platform. This is a checklist I'd run through before, during, and after submitting any personal or business information:
Verify your lender's legitimacy. You can do this by checking for a Nationwide Multistate Licensing System (NMLS) number. This is a registration/licensing system used by many non-bank lenders, brokers, and financial companies. The NMLS number should be listed somewhere on the lender's website (it's often near the footer or contact information section).
Look them up on the Better Business Bureau (BBB). Anyone can do a simple search on bbb.org of a business to see its customer complaints, grade ratings, and dispute history. (Just beware that not every single business is on there.)
Use a secure internet connection. Do not use a public Wi-Fi connection when filling out a lender application. They're much less secure and make it easier for bad actors to access the information of anyone connected.
Don't share any of your passwords. Make sure your passwords are in a secure location, and avoid sharing them with anyone at all costs. It's a red flag if anyone asks for your password.
Monitor your credit score and report. Keep a close eye on your credit report so you can spot any suspicious activity right away. We've seen people suddenly realize their identity was stolen years ago and has been used for things they had no idea about.
What To Do if Your Information Was Compromised
Applying for an online business loan is safe if you’re working with a legit, trusted lender. But if you suspect that your data or personal information has been stolen or have reason to believe it’s being used nefariously, this is what you need to do as soon as possible, in this order:
You should immediately alert your lender. Or, if you suspect that the lender itself could be the source of the problem, stop communicating with them and skip to the next step.
If sensitive financial information was shared, put a freeze on your credit cards and place a fraud alert with one of the three major credit bureaus (you only have to contact one because they're all required to notify each other of fraud alerts).
Report the incident to the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC).
Monitor your bank and credit accounts vigilantly for any suspicious activity. Continue to do this often and for a while until the situation is completely resolved.
During times of stress, things can get fuzzy, so it's a good idea to document all communications you make about the incident with all organizations involved. Doing this will help you keep track of what's happening for your own records. You may need them should the situation escalate.
You may also want to file a report with local police, depending on the situation. This may not do much immediately, but it does help create documentation of the incident.
FAQs About Security and Safety in Online Lending
Here are answers to some questions I often get about information and data safety.
What Information Does Clarify Capital Collect When I Apply?
At Clarify, our application only takes about two minutes. We generally ask for:
Personal information (like your name, Social Security number, and contact information)
Business financial data (bank statements, tax returns, revenue)
Credit report data
Other business details (like your EIN, time in business, entity type, licenses, registration)
Does Clarify Capital Sell My Data?
Clarify does not sell your personal data, nor do we share your information with unrelated third parties for marketing purposes or retain data longer than necessary.
How Do I Know if an Online Lender Is Safe?
Some common red flags for sketchy loan lenders include guaranteed approval regardless of credit, pressure to act immediately, up-front fees before approval, no physical address or phone number, no NMLS registration, requests for payment via gift cards or wire transfer, unsolicited offers via email or social media, and vague or hidden terms.
What Is the Gramm-Leach-Bliley Act and How Does It Protect Me?
This law requires financial institutions to protect sensitive financial information and explain how customer data is collected, shared, and stored. For borrowers, the law mainly protects through privacy disclosures, data security requirements, and limits on certain data sharing.
What Should I Do if I Think My Information Has Been Compromised?
You should immediately alert your lender (or the company you applied with, if you hadn't yet agreed to financing). If sensitive financial information was shared, place a fraud alert with the major credit bureaus, place a freeze on your credit, report the incident to the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC), monitor your bank and credit accounts, and document all communications as soon as possible. You may also want to file a report with local police, which may not do much immediately, but helps create documentation of the incident.
Michael Baynes
Co-founder, Clarify
Michael has over 15 years of experience in the business finance industry working directly with entrepreneurs. He co-founded Clarify Capital with the mission to cut through the noise in the finance industry by providing fast funding and clear answers. He holds dual degrees in Accounting and Finance from the Kelley School of Business at Indiana University. More about the Clarify team →
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