In the bridge lending universe, the ability to close a loan expeditiously is paramount. Some borrowers are seeking what we term “delayed acquisition financing”, where they have already purchased a property (usually cash) and now want to place debt on the property to free up capital for other projects. These borrowers generally have no time requirement and very little incentive to close quickly. Conversely, other borrowers have a hard impending close on a purchase, the previous lender may have fallen out, and they have two weeks (or less!) to secure financing or they lose the property, and potentially a large deposit to boot. Other situations that require a fast close are a 1031 exchange or if the property was won at auction and the auction contract requires a fast transaction. Whatever the situation, a bridge lender’s capacity to close fast can mean the difference between getting the business or losing it to a firm that can get it done. So in addition to a fast close being important to the borrower, it’s also important to us.
As a lender that recognizes how important this ability is to our borrowers, we have strategies to make sure that we are providing the borrower with all of the tools they need to close on time. This includes scheduling 3rd party inspections immediately (and paying the extra for the expedited turnaround), scheduling a “kick off call” with the lender, borrower, and respective counsels, delivering a detailed list of required due diligence items on day-one, and responding to all items that borrower delivers as soon as possible (while still maintaining the required level of compliance with closing policies).
Despite the fact that we provide our borrowers what they need to close on time, some borrowers choose not to utilize those tools – we’re all adults and that’s their prerogative. However, for those that are concerned with hitting the target, here are what we find to be the most common roadblocks to a speedy closing.