You've Made the Pitch, What Happens Next? (Pt. 1 of 2)
CAPX recently helped a borrower who lost a meaningful due diligence deposit and a few months of time, when his bank’s credit committee declined his deal at the very last moment.
The borrower believed the process to be going smoothly, until three months down the road, suddenly the lender rejected the deal. It turns out that a large borrower in the lender’s portfolio defaulted on a loan, and the credit committee had grown reluctant to book large new loans to reduce risk concentration.
No one informed the front-end banker as to this sudden shift in sentiment until the deal was rejected. So, due to forces outside of his control, the borrower had wasted three months of effort and $150,000 on a deal that was doomed from the start.
The process of obtaining a loan is fraught with uncertainty, especially given current macroeconomic conditions. Unfortunately, this borrower made two critical mistakes…