Working with multiple lenders after an LOI

searcher profile

August 12, 2024

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

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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commentor profile
Reply by an investor
from University of Missouri in Austin, TX, USA
Being familiar with multiple lenders is great because the reality is that you'll find each of them have a bit of a different appetite. When the time comes, you'll want to officially select a single lender to go down the isle with you. Getting the best terms is great, but execution trumps all. There is nothing worse than the execution of a lender (for whatever reason) being the shortcoming for why a deal fails or doesn't close. In SBA world, I have to imagine they're all going to have similar enough terms if they're looking at the deal with you, so I would go with the person you trust most and have the highest conviction in.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Great question. I would agree with Hallam. The vast majority of SBA lenders require a deposit with a term sheet. Once you have signed that term sheet it is usually impractical to have multiple lenders working on an approval at the same time. You want to be sure you pick the lender that is not only providing you good terms, but you are confident can get the deal across the finish line and meet your own requirements. If you need any assistance you can reach me here or directly at redacted
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