Money image 2

Fast and Efficient Commercial Real Estate Funding: Help Us Help YOU!

9/10/2019 by Laura Brunner

In the world of Commercial Real Estate, timing is everything. This is especially true when it comes to coordinating and securing loans. Borrowers want to be able to obtain financing quickly, and Lenders want to start earning money on loans as soon as possible. The biggest determinant of the length of time to funding is generally dependent on the efficiency and speed with which a loan is processed. It seems that borrowers generally feel powerless and left in the dark when it comes to how long it will take them to obtain their loan funds. However, this is not actually always the case. While the Lender’s operations team has a lot to do with this timing, the borrower has a great deal of impact on the speed involved in the lending process. The first key for borrowers to keep in mind, is that all documentation needs to be reviewed by at least one member of the Lender’s team, which can take a few days depending on how busy they are. Also, it is important to understand that the documentation you provide may not be exactly what your Lender needs. Anticipate that there will be follow up questions, which will add more time to your loan processing. Providing documentation early is the first step towards a fast, smooth loan closing.

Be Proactive and Communicate

As a Borrower, no one wants obtaining a loan to feel like a full-time job. You already have a full-time job, and presumably you have a life outside of that job - family, social commitments, community involvement, etc. You should not have to sacrifice these aspects of your life in order to secure the funds that you need to further your business or investment plans. By taking a proactive approach to your loan, you can drive the loan process in an effective and efficient way. All Lenders have a standard set of documentation that they need in order to fund a loan. Before submitting a loan request it is important to gather some of the primary documentation that a Lender will need. This documentation can vary from lender to lender, but generally there are 5 key documents that will be needed to get started: Rent Roll, Current P&L Statement, Current Personal Financial Statement, Business Plan, and a Property Description. Once you submit your loan request, ask for the full set of documentation that will be required as soon as possible so you can be fully prepared with everything that you will need. Even more importantly, do not wait to provide your documentation to the lender. Submit all documents that you have available quickly so the operations team can begin reviewing them while you work on gathering the more time-consuming documentation.

Give Lenders a Chance to Help You

After reviewing the requested needs list, alert your Lender to anything that may be an issue to obtain and ask questions about anything that you are not clear on. Don’t ignore items on the list just because you don’t think that they will apply to you. Communicate clearly with your loan processor so they can guide you through the loan transaction painlessly. Your loan processor can be your biggest ally in getting to the funding table as quickly and efficiently as possible. This is our full-time job, let us use our expertise to your advantage!

Nothing is more important than staying on schedule for your required funding date. Keep in mind that there will be some time needed to obtain the necessary property reports for your financing. Appraisals, environmental reports, property condition reports, etc. take some time and will largely drive the final timing for your loan funding. These reports also require site inspections that need to be coordinated with your team, or the seller’s, and the vendors that are completing them. Be sure to allow all site inspections to occur as soon as possible to avoid any delays. You should expect at least 2-3 weeks for these to be completed, and of course you should also account for a few extra days so the reports can be reviewed by your Lender once they have been completed.

Also, If you have any travel plans that might occur during the processing of your loan, communicate those dates clearly and often with your Lender’s team. While the rise in technology has made many things easier to do from anywhere in the world, there are still some things that cannot be done electronically. Certain documents still need to be signed with a Notary Public, and that can become very difficult when you are travelling. No one wants to have to find a consulate in a foreign country just to sign a couple of loan documents! Let your processing team know the dates that you will be travelling so they can work proactively to coordinate any necessary document signings with your schedule.

Common Mistakes

One of the most common mistakes that borrowers make is that they put off the request for insurance until the end of the transaction. Provide contact information for your insurance agent early in the loan transaction so your processor can take the reins on this piece for you. It may seem like a minor detail among the multitude of important steps involved in obtaining a loan, but far too often this is something that jeopardizes a timely closing.

Another common mistake is not providing all of the entity documents that are requested. When a lender asks for organizational documents for an entity, don’t be afraid to over share. All too often we receive just one or two of the documents that are needed, and numerous requests must be made for additional items. This back and forth of requesting documentation simply wastes time, and it makes for a more painful and drawn-out loan transaction. Even more importantly, once all of the initial entity documentation is received, there may be additional information needed, which could cause a lot more delay than you may think. For instance, if your entity is a Corporation with a 20% shareholder that is an LLC, many Lenders will need to see the formation documents for the LLC in addition to those of the primary Corporation. However, if you only provide your Corporation’s Articles of Incorporation to your Lender, they have no way of knowing that there is an additional entity that needs to be reviewed, and therefore cannot request that documentation in a timely manner.

Lastly, be sure to provide the most current financial information possible. It may seem that it would be helpful to just go ahead and send in a rent roll that you prepared 3 months ago, but it doesn’t actually get anyone closer to where they need to be. Go ahead and wait a day or two to send in financials so that you have time to gather information that is current and useful. All operating statements should be dated within 30 days of the start of the loan process. This will ensure that your lender has accurate information and can appropriately underwrite your loan from the outset, and it will reduce the likelihood that you will have to provide a second set of financials prior to closing.

District is a balance sheet lender re-engineering the commercial real estate mortgage process. By developing innovative technology, District is able to increase the speed and accuracy of deploying capital while increasing transparency into the lending process. As a national firm, we specialize in short- to mid-term bridge debt on all product types with competitive rates and leverage.

District is a balance sheet lender re-engineering the commercial real estate mortgage process. By developing innovative technology, District is able to increase the speed and accuracy of deploying capital while increasing transparency into the lending process. As a national firm, we specialize in short- to mid-term bridge debt on all product types with competitive rates and leverage.

Follow Us

Image 11 18 19 at 14 01

Are we in a Goldilocks Phase of the Economic Expansion?

Absent a geopolitical shock, a surprise in the trade war, or a disorderly Brexit, I am expecting a Goldilocks economy for 2020, an economy with modest, non-inflationary growth, not too hot, not too cold, but just right.

Read the full story

11/18/2019 by Arash Sotoodehnia, PhD

Building 394961 1280

How Commercial Real Estate Lender’s view Collateral by Property Type

Commercial Real Estate can largely be broken out into four different product types: Multifamily, Retail, Office and Industrial. Within each of these product types there lies specializations, nuances and combinations that make up the commercial real estate sector.

Read the full story

11/5/2019 by Kevin Henderson

Freddie and Fannie

What to do with Fannie and Freddie?

In September, the Trump administration proposed a new plan to re-privatize Fannie Mae and Freddie Mac. Their proposed plan would reverse one of the first actions taken in order to address the great economic crisis of 2008. But any modification of the status-quo would certainly have enormous ramifications for lenders and borrowers alike. If everything is working so well, why not just leave things as they are?

Read the full story

10/21/2019 by Bill Lanting

Get Started

District is the modern commercial mortgage lender providing you with higher
leverage, low rates and fast closings. View our Loan Programs or get started here.