“Due Diligence”

After being turned down by five traditional lenders I have engaged Quaker State Commercial Finance to refinance my RV Park that is in foreclosure.

 I keep asking myself why do lenders’ require a “Good Faith Deposit”? How can “Due Diligence be so expensive?

 Good question!

Lenders perform “Due Diligence” to verify that all of the facts and representations made by you, the potential borrower, are accurate and correct and there are no hidden financial time bombs lurking that would financially “blow up the deal” and  jeopardize their collecting their money if you should fail.

 As they are making a major investment in you and your company; they have to make sure that you are telling the truth about your financial situation and not hiding anything from them. They want to be sure that you can and will pay back your loan. This takes time effort and costs money. You tell us that your property is worth $3,000,000.00; we have to verify that value. You explain that your credit has gone down to a 450 FICO score because your former spouse cleaned you out; we have to verify it. You tell us that you never filed for bankruptcy; we have to verify it. It goes on and on. No one trusts anyone in this business.

 I tell borrowers to tell the truth no matter how ugly it is. You would be amazed how often prospective borrowers try to “pull the wool” over our eyes. When we discover that they have an IRS tax lien for $800,000.00; there goes the loan up in smoke. The truth always comes out in the “Due Diligence” process. “The truth will set you free”.

 Sometimes I am shocked by the blatant misrepresentations, omissions and bold face lies told to us by potential borrowers. On one deal we were told that the borrower owns a marina in NYC “Free and Clear”; when in fact his grandfather owns it and would not pledge it. The two months of work and the money we spent evaporated. Another time the borrower represented that his property had no environmental issues when in fact it was next to a superfund site. There is nothing that turns off a Lender like a lie! Make sure that you tell the truth because blatant lies or misrepresentations are always discovered in the “Due Diligence” Examination.