Working with multiple lenders after an LOI

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by a searcher from Texas Tech University
in Austin, TX, USA

1yr ago

Working with multiple lenders after an LOI

I am currently under an LOI and I am in the initial stages of working with multiple lenders, mostly SBA. The reason I am currently working withe different lenders is because I am seeing that each of the lenders have different criteria even for the same deal, based on industry, down payment, DSCR etc.

I would like to be on the safe side than sorry to ensure I am able to secure the loan in an acceptable terms.

At what stage should I narrow down to one lender. Is it only when the loan gets approved? Just want to understand the general principles and guidelines here and what others have followed in general.

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reply by a searcher 1yr ago
from Bowling Green State University in Surrey, BC, Canada

Thanks for the tag ^redacted‌
I agree with ^redacted‌ but would also just say don't overshop it - the law of diminishing returns kicks in after the 3rd term sheet. And lenders don't want to waste their time being the 4th term sheet or being in a bake-off with a half dozen lenders.
If you have an idea what constitutes market terms, work your 1-2 lenders to sharpen their pencils and call it a day. I've seen so many entrepreneurs waste so much time hitting up every bank in town - maybe because it seems like 'easy work', pitch, pitch, pitch. but it's not the highest and best use of time.
Generally, at the signing of a term sheet is when a commitment fee is required. That's typically when you pick your horse and ride. Good luck

reply by a searcher 1yr ago
from Baruch College in New Jersey, USA

Thanks ^redacted‌ for the tag. Like others have stated, multiple lenders is a must. Get term sheets and choose which one is the best fit for your needs. Take into account their reputation and level of service throughout the life of the loan not just the terms. Pick your lender and move forward to underwriting.