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Tuesday, May 27, 2008

Daily Observations - Experience

As the market for lenders get slimmer and slimmer another deterrent has been thrown in our midst. Lenders for non-SBA are now also requiring ample experience in the project they are planning to develop or purchase.

Yesterday a good cash flowing project was enough, then they added outside collateral and today we here that the experience of the management team is not enough to suffice to get a loan approved but that the owners of the project have to have the direct experience.

The lenders are using every excuse they can find to not do a deal.

Saying that there are deals that are getting done they are the cream of the crop but they are closing. So wrap your arms around a good project with the right cash flow, lots of experience and collateral and the deal will get done.

But seriously speaking not all projects are this difficult to get financed, just be aware that the more positives that the project/owners have going for them the more likelihood that you will find a lender today that wants to fund the deal.

Remember lenders only make money when they lend.

Understanding the lenders Underwriting Requirement for different investment types is crucial in today's market.

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