When you need to secure financing and it needs to be done quickly, it can seem an impossible hill to climb. Most borrowers are used to the process taking a month, two months, or even longer, and that’s assuming no issues suddenly arise. In truth, a motivated developer with good collateral can successfully close a commercial real estate loan in as little as ten days. It’s challenging, to be sure, but certainly not impossible. There are a few things you can do to become a lean, mean borrowing machine and put yourself on the fast track to successfully fund your commercial real estate ventures. Check out our step-by-step guide to closing a loan in little more than a week, and get ahead of the competition with a more efficient game plan.
Step 1: The Prep. If you’re going to secure a loan in 10 days, you must have all your ducks in a row prior to pursuing the development opportunity. Before you sit down with any lender, have your house completely in order. They’ll want to see an updated, clear title with no partnerships in dispute and no liens. You must also have a current environmental report with no issues. The property will need to have an up-to-date, professional appraisal done, including a flood assessment. If you have loan payoff letters, keep them handy. Hiring a lawyer specializing in commercial real estate lending will help you keep the ball rolling. Lastly—and this is key—you should also own real estate of 65-70% greater value than the loan request that you can put up as collateral. A lightning loan can’t and won’t happen without some big guarantees for the lender.
Step 2: Forget the traditional lenders. If you’re looking for expediency, pursuing financing from traditional banks and lenders will all but ensure you miss your do-or-die date. Even if you already have the necessary paperwork and documentation from Step 1 ready to go (and you should), traditional lenders might be wary of accepting appraisals and inspections done before applying for the loan and may require they be done again. And as you know, when the gears of big bureaucracy turn, they do it very slowly, and with scores of extra cogs. Brokers, underwriters, lawyers, surveyors, appraisers, inspectors, notaries, insurance companies and title companies all have an intertwined role to play, and it’s doubtful that the majority of them will turn your requests around with lightning speed. If the property in question is located within a flood zone, an additional appraisal of flood risk and the purchase of accompanying insurance may also cause a delay. Any one of these independent, moving pieces can raise a red flag and hold up the entire process. And you need to close fast, keeping track of all the loose ends and the various actors inundating your phone and inbox is a recipe for a disaster. If the window to make a sale is less than two or three weeks, then make no mistake: traditional lenders will likely leave you holding the bag on closing day. If so, you can kiss that deal goodbye.
Step 3: Contact a Private Lender ASAP. If you need financing fast, your best bet are private lenders, such as Kennedy Funding. These financiers are experienced at closing multi-million dollar loans in a short amount of time. All you need to secure the funding in a quick and painless manner is the requisite paperwork and collateral as outlined in Step 1. By quickly approving high-risk commercial real estate loans, these firms allow commercial developers to strike while the iron’s hot. Kennedy Funding, for example, prides itself on being able to aid developers to fund projects when conventional sources of funding can’t be secured in time. “A borrower comes to us with a vision for their project,” said Kevin Wolfer, President and CEO of Kennedy Funding, “but there’s one major obstacle: getting money for working capital to move the project forward. Making that happen is what Kennedy Funding is built on.”
Follow these steps, and never miss out on another fast-closing commercial real estate venture again.