Because of Montegra’s role as a Colorado hard money lender, we are constantly talking to loan applicants.  The most common reason that these borrowers call Montegra is they have been turned down for a loan from their bank (or from any other banks) and are very frustrated by the experience.  The following represents an imaginary Top 10 List of reasons as it might appear on the David Letterman show.

Top 10 Reasons Real Estate Borrowers Are Turned Down By Banks:

1. We would love to make you a loan, but we only fund loans to current clients of our bank.  If we made you a loan you would become a client of the bank, but since you aren’t a client we can’t make you a loan.
2. We are really sorry.  The Chief Credit Officer ate your loan application.
3. This is a rental property – we only fund loans on primary residences.  This sometimes comes out as: this is a primary residence sorry, but we only fund loans on rental properties.
4. One of the buyers had a:  bankruptcy – tax lien – short sale – or some other type of unacceptable credit event in the last 7 years.
5. Your personal financial statement (as a guarantor) is not strong enough.
6. Your rental property does not have the debt service coverage that we require.      Your property has debt service coverage of 1.20, but we require a 1.25 debt service coverage ratio.
7.  We would like to do this loan but our chief credit officer won’t let us.  We really thought we could do this loan and are sorry it took is 60 days to turn this down.  We are sorry that you now have a non-refundable $250,000 earnest money deposit, but bad things sometimes happen to good people.
8. Your credit score is 724.  We only fund loans when a borrower’s credit is over 725.
9.  The good news is that you have strong personal financials and good personal credit score.  The bad news is that you do not have sufficient “liquid” funds to meet our liquidity requirements.  If you had another $300,000 in a savings account we could have made this loan.
10. The property is OK and your credit score and PFS are fine.  However, our bank just is not able to fund loans to (take your pick):   Trusts – Corporations – Off Shore Entities – Certain types of partnerships.

Montegra Capital has a 41 year history of “getting the loan done” for our clients.  We don’t have red tape – we don’t have a “chief credit officer” – we don’t have ridged unbendable rules.  We just want to fund your loan and do it in the time frame that you require.  If you have recently heard any of the “Top 10 Turn Down Lines” (or even if you just want to obtain a loan without brain damage) contact Bob or Kim at Montegra Capital and discuss your commercial borrower needs with them.

[google_authorship], because of his more than 40 years of experience in funding hard money loans, is considered an authority on hard money or bridge financing.  He frequently speaks at meetings and conferences and writes articles on these subjects.