Over the years, I have heard lenders claim their USP to be that they are not “tick box lenders”. I think a little context needs to be taken into consideration when this statement is made, as some can take this quite literally and assume that brokers and lenders can make the impossible possible.
Ultimately, aside from what a lender may claim, they 100% have boxes they need to tick in order to fund a deal.
The main “boxes” that need to be ticked for the most part are:
1. Who is the borrower, and do they meet the requirements of not being PEP, having no criminal records, or adverse credit or media?
2. Does the borrower have a track record to show they are a safe pair of hands and have done what they are proposing to do before?
3. Does the project make sense from a profitability perspective? There is little point in funding a project that makes very little money.
4. Does the project have a clearly defined and feasible exit? It is easy to lend money; the difficulty is getting the money back, as many lenders will concur.
5. Everything is subject to legals and valuation. If the property does not value up or there is an issue with the title, such as charges or restrictive covenants, this will change the eagerness of any lender.
What they really mean is that they can be more flexible on certain requirements over other, more traditional lenders. For example, some are ok with some adverse credit but not adverse media. And those that are ok with adverse credit are only ok with it if it has been concluded and not ongoing.
Another example could be the track record of doing similar projects. Even though the main sponsor has not done this type of project in the past specifically, their background and/or the team around them have.
So boxes need to be ticked. And they are the same boxes as every other lender. They can just be ticked by taking a ‘commercial’ view on a case-by-case basis.
Written by Merryoaks Founder and Managing Director, Saam Lowni.
