Large loans: a user’s guide
For those with less experience handling large loans, they can at first be a daunting prospect. This needn’t be the case but there are a few important measures that should be taken to ensure these bigger transactions are handled as efficiently as possible.
The key to success with large loans is preparation: when a broker approaches a lender it is important that they fully understand the transaction they are presenting. If you are unclear on any aspects then ask your client to clarify first so that you are fully prepared. Nothing is more frustrating for all concerned than the inevitable back and forth between client and broker as a result of incomplete details. This can give the client the false impression that the lender is not keen on the proposal, when in reality; a little more time spent on a submission ensures fewer queries and a greater likelihood of a positive initial response with indicative terms.
Wherever possible, try to put yourself in the lender’s shoes and question whether the information you are presenting them with is fully coherent, or is it likely to raise further questions? What is the purpose of the loan? If it involves a refinance or capital raise then further information will be needed, such as full details of the security offered (copy sales particulars/previous valuation report etc. will assist) and a tenancy schedule (if commercial, then details are important if leases are due to expire shortly). Does your proposal meet the lender’s criteria such as DSCR or LTV?
All this may sound like common sense but you would be surprised how regularly basic details are omitted, which often cause delays, and in the worst cases, failure to secure the finance.
The borrower structures on larger loans can sometimes be more complex than smaller transactions so take the time to cover fully all aspects of the application. Some specialist lenders such as Shawbrook will consider certain off-shore jurisdictions so make sure you ask your client for full details of the borrower structure before approaching a lender. Not all lenders will be able to assist with your loan and for them there is nothing more frustrating than spending time and effort assessing a proposal only to be told subsequently that the borrower company is situated in an exotic, off-shore location that falls foul of their borrower criteria.
With larger loans come more comprehensive application processes, but as long as the broker takes the time to gather all the relevant information before approaching the lender, then the application is similar to the more common small loan finance options. My golden piece of advice is to be thorough, not only does this speed up the entire process, but it makes the application process easier for all parties involved. Quality clients with larger loan requirements deserve a quality service and spending that extra effort preparing your presentations can help to build a productive relationship for all concerned.
*Andrew Faed is Regional Development Manager for Commercial Mortgages at Shawbrook Bank