Garbage in, garbage out. Despite the obvious revelation that thorough package submissions are more likely to yield greater success with lenders, most lenders still complain about high volumes of poorly submitted deals.
To ensure a smooth process and increase the likelihood of approval, brokers must follow best practices that position the deal in the best possible light. Here are key steps brokers should take when submitting deals to lenders to build stronger relationships, close deals faster, and enhance their professional reputation.
- Know the Lender’s Criteria and Appetite
Each lender has its own unique risk tolerance, deal size preferences, and industry focus. Before submitting a deal, brokers should be fully aware of the lender’s underwriting criteria, such as credit score requirements, cash flow metrics, and collateral expectations. Tailoring your submission to align with the lender’s current appetite can save time for both parties and increase the likelihood of approval.
Best Practice: Build a detailed understanding of each lender’s specific preferences. Avoid sending deals that don’t match the lender’s core competencies or requirements. This not only improves the chance of approval but also builds trust with the lender.
- Provide Complete and Accurate Documentation
One of the most common reasons for delays or rejections in deal submissions is incomplete or inaccurate documentation. Lenders rely on precise financial information to assess a deal’s viability, and incomplete packages slow the process down. As a broker, it’s essential to ensure all documents—financial statements, tax returns, lease agreements, and credit reports—are complete and clearly organized before submitting them to the lender.
Best Practice: Use a checklist of required documents for each deal type and lender, and ensure everything is submitted upfront. Thoroughness demonstrates professionalism and expedites the review process.
- Clearly Present the Business Case
Brokers should go beyond just submitting financial documents; they should tell the story behind the deal. This includes explaining the client’s business model, how the financing will help the business grow, and why the company is a good risk. Providing context about the industry and market conditions can help the lender better understand the strategic importance of the deal.
Best Practice: Craft a clear and concise executive summary that highlights the deal’s strengths, outlines the borrower’s business plan, and addresses potential concerns upfront. By framing the narrative, brokers help lenders make informed decisions faster.
- Anticipate Lender Questions and Address Concerns Proactively
Lenders will inevitably have questions or concerns, especially regarding deals that involve higher risk factors. Anticipating those questions and addressing them upfront not only saves time but also builds credibility. For example, if the client’s credit history shows past issues, proactively explaining the steps the business has taken to address those issues demonstrates that you’ve done your homework.
Best Practice: Identify potential red flags in the deal and prepare a clear explanation. This can include providing mitigating factors, such as recent revenue growth, strong management, or additional collateral. Proactive transparency shows that you understand both your client’s needs and the lender’s risk concerns.
- Highlight the Borrower’s Strengths
While lenders look closely at financial risk, they also consider the borrower’s strengths, including management expertise, past success, and market positioning. As a broker, it’s important to emphasize these strengths in your submission. Whether it’s a strong track record in the industry, a robust pipeline of future projects, or loyal customers, highlighting these assets can make a significant difference.
Best Practice: Include details about the borrower’s leadership team, industry position, and recent successes. Lenders want to know that the company is well-positioned to repay the loan or lease, and providing that context builds confidence in the deal.
- Communicate Effectively and Respond Quickly
Clear and consistent communication between brokers and lenders is essential to keeping deals on track. After submitting the deal, brokers should be readily available to answer questions, provide additional information, and follow up on the lender’s timeline. Delays in communication can stall deals or cause them to fall through.
Best Practice: Keep open lines of communication with the lender from submission through approval. Be proactive in providing updates and responding to any requests promptly to keep the process moving smoothly.
- Position for Long-Term Relationships
Submitting a deal is not just about getting it approved—it’s also an opportunity to build long-term relationships with lenders. Consistently submitting high-quality deals and communicating effectively fosters trust, increasing the likelihood that lenders will prioritize future submissions. Treat each deal as a reflection of your professionalism and as a step toward strengthening your relationship with the lender.
Best Practice: Strive for long-term partnerships by consistently delivering well-prepared deals and maintaining professionalism throughout the process. Building trust with lenders enhances your reputation and increases your chances of success in the future.
Conclusion: Best Practices Lead to Success
By following these best practices, brokers can significantly improve their success rate when submitting deals to lenders. Understanding lender criteria, presenting complete and accurate documentation, telling the story behind the deal, and maintaining clear communication are all essential steps in positioning a deal for approval. Additionally, fostering strong relationships with lenders through professionalism and transparency ensures that future deals will be smoother, faster, and more likely to succeed.
