What Makes Commercial Loan Approvals Take So Long?
First, you need to have an understanding of what makes some commercial loans take so long for approval. For one thing, traditional lenders like banks and credit unions have vast networks of employees and other invested parties whose job it is to oversee loan applications and approvals. This network isn’t bad. It helps ensure that the primary stability of the institution is upheld during any risk-involved financing. But it does add additional layers of red tape to the loan approval process; red tape that you, as the loan applicant, need to get through before you see any approval notification.
This network and complex web of approval process can make loans take an inordinate amount of time to go through. Lots of small, seemingly insignificant things can stall approval along the way. They include:
- Required signatures can’t be acquired because someone is on vacation
- A clerk made an error on the paperwork and it has to be redrawn
- Federal regulations are in flux and all applications are on hold
- A change in personnel or policies causes confusion among internal departments
Finding the Right Lending Organization Is Key
It’s imperative that you find the right lender to apply for your commercial real estate loan. In any kind of real estate, there are lots of different lenders available, but only a very few that can close on a commercial loan in as little as two weeks. When looking for the right lender, here are some features to look for:
- You want a lending organization that offers support to help ensure an approval, not one that leaves it all up to you. When you have questions, you want to be able to get answers in a timely manner, from a real person who is invested in your success.
- You want a lending organization that you can work with now and in the future. This means finding a lender that offers commercial loans on multiple property types; not just the one you’re involved with at present.
- This will help you get comfortable with your lender and establish a rapport, enabling faster applications and approvals in the future.
- Look for a lending organization that provides transparency about the entire funding process so you know exactly where you stand at every step of the way.
- Find a lending organization that provides valuable resources about the commercial real estate industry in general.
- Work with a lending organization that will bring lenders to your door; one where you can receive proposals from multiple commercial lenders. This puts you in a position of power, where you can pick and choose to decide which lending option is best for your project.
- Finally, choose a lending organization that understands the fast nature of the commercial real estate investment world; one that offers closing in as little as two weeks.
How You Can Facilitate The Commercial Loan Process
Once you correctly submitted all your applicant documents, the commercial loan process is in the hands of the lender. But there are lots of things you can do as a borrower to facilitate the commercial loan process.
Apply For The Appropriate Loan Program
There are many eligible loan programs for borrowers who invest in commercial real estate. To avoid wasting your time, be sure to apply for the one that best matches your project and your funding needs. Don’t ask for a $25 million dollar loan with a program that maxes out at $20 million. Be sure to assess the LTV before applying so you fall within lender’s guidelines.
For questions about various loan programs available at Raisal, speak to a member of the Funding Success Team at 1-855-407-5626. Or, with general inquiries about loan programs, you can always email our team direct.
Ensure Your Paperwork Is In Order
Each loan program has its own requirements when it comes to paperwork submission. You may have to submit bank statements, personal tax returns, rent rolls, historical operating statements and more. Be prepared and have these on hand as soon as possible so you can submit them in a timely manner. If your lender has to wait while you gather and check all these, it will be you, not them, who is delaying the approval.
Have Cash On Hand To Cover Closing Costs
Some loan programs require cash at closing that could be up to $15,000 or more. If you’re unprepared without cash on hand, your closing could fail, costing you the loss of your investment opportunity. Have enough liquidity in your investment portfolio to take care of this situation in order to facilitate the commercial loan process.
Raisal offers all the features of an attractive lending organization with none of the red tape that you may encounter with a traditional lender. We offer a support team that is dedicated to helping you achieve your commercial real estate investment goals. Start your request today to learn more about your borrowing options at Raisal.