Commercial Financing Loans

In the past commercial lenders were able to turn loans around and get them closed within 4 weeks. Now, some of these transactions are getting pushed back to 4 months before they close. Even in the past it was rare that a lender could get all of the underwriting, third party reports, third party report reviews, ordering of loan docs, signing, closing, funding, and recording all within 30 days. Now, anyone who tells you they can is flat out lying to you. It is getting to the point where even 45 days is becoming a stretch.

What is causing the long approval processes and longer closings? Many things are contributing to this problem. It is important to note that loans with more guarantors, or entities are naturally going to take longer to review and make sure the lender has all of the documentation they need for underwriting. Aside from that here are a list of some things to be aware of when considering the timing of the loan:

1. Get your LOI signed and Send in Your Deposit as Soon as Possible

Although the market is down, many lenders are incredibly busy with loan requests. They are moving forward with borrowers who are qualified and ready to move forward. After the lender provides the borrower with a letter of intent (LOI) they move to the next deal. Any hesitation on the borrowers part after the lender has given them the LOI is typically seen as the borrower “shopping the deal”. When the borrower finally decides to move forward, the lender may have put a few other loans in process before them.

2. Third Party Reports

Up until recently appraisers had many comps and all were increasing which made third party reports, such as appraisals, a breeze. Today appraisers are finding it more difficulty to get an accurate valuation of each property. On top of that, lenders and regulators are watching closely to make sure appraisers are being honest and giving honest valuations. With everyone watching every step of the way, appraisers have been taking their time to make sure that can be as accurate as possible.

3. Additional Approvals From Banks/Lenders

With all the current problems that lenders are facing, many banks and lenders are requiring additional approvals within their organizations. Most managers at banks who have been approving loans for years, now need the President or CEO to sign off on almost every deal. The additional approvals usually add at least 3 extra days and sometimes longer as each deal needs to be presented and explained.