Lender Dropout: Prevention and Fixes

Have you heard of lender dropout?

Lender Dropout occurs when you have been working with a specific lender and then….you’re not.

This is a devastating occurrence when it happens. You have put time in with your lender partner. Now, they are no longer interested in your project. The result is a lot of wasted time and effort and possibly some money, too, if you have earnest money or payments due to sellers on a tight schedule.

How Can GRP Capital Help if your Lender Bails?

• GRP Capital has a large network of lenders, including those that specialize in quick closing. Your project may even be a candidate for bridge lending.

• We can advise you in restructuring ownership, refining your financial reports and working to improve appraisals to get you a better result.

• Sometimes, we will advise you to wait and make significant changes in your business plan or operations before seeking financing. We never want our clients to be rejected by the Small Business Administration, which can have longstanding consequences.

Can you prevent lender dropout?

• Be choosy. GRP Capital knows the lenders. We also know that not every lender is a match for you. Some lenders prefer specific geographical areas. Others like certain industries and avoid others.

• Understand nervous lenders. The last several years have thrown lots of things into the lending landscape: higher interest rates, some shaky loan institutions, ups and downs in the stock and bond market reports. Add to these supply chain issues, vagaries of demand and you have met our partners: nervous lenders. They want to lend to serious, stable borrowers. Our job is to make the case that you are dependable as managers and owners and will be able to pay back your loan.

• Talk to GRP Capital before you proffer a bid. It is very tempting to sign a provisional agreement and hand over your earnest money, especially if you think that others are interested in the same piece of commercial real estate. But you need to understand what could be tricky about your loan and what could even slow down your closing.

• Don’t make promises to close quickly. Nervous lenders mean longer closing times. Keep this in mind if you will be penalized or have to produce hard money down payments with a longer closing. .

If you are considering a loan for purchase or refinance or construction and would like to discuss your plans, feel free to contact our team.  We can conduct a business evaluation and even prequalify you for a loan at no cost to you.