Do You Have Multiple Lending Partners? Be Discrete

In business borrowing it is o.k. to have multiple lending relationships.  Unlike marriage where monogamy is the ideal structure, borrowers can nurture relationships with several targeted lending sources.

But be discrete to avoid damaging a lending relationship.  Confidentiality is a top concern for lenders. They want to keep their proprietary bid details from competitors.

Keep your lenders happy with these tactics for discretion:

  • Don’t shop your quotes among lenders.  They all talk and you will lose credibility.
  • It’s not worth a few basis points in interest rate to sell-out the leading bidder.
  • Keep close control on electronic and paper lender correspondence by limiting distribution to those in your organization who need to know.
  • Don’t disclose the winning loan terms until after signing the loan application and then try to limit disclosure to data ranges.  Runners-up lenders will press for market data but hold them off until you ink your deal.

A term sheet will often contain boilerplate language requiring confidentiality as a condition to providing the quote.  Be a good borrowing partner and avoid shopping quotes to competing lenders. The small gain you make in pricing or terms could have lasting negative consequences for your lending relationships.

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About Michael Shelton

Your Business Coach Facilitating Delegation and Work Group Engagement Michael Shelton has over twenty-five years of business and military accomplishments, including extensive experience with one of the largest, publicly traded real estate investment trusts (REIT). He is a qualified business coach with assignments in cross-functional work group management, strategic planning, unit leadership, joint venture acquisitions, executive education, mentoring, training and merger integration. Michael has accumulated best practices for building committed work groups from more than $4 billion of capital markets transactions and commercial property development. He served as a commissioned officer and helicopter pilot in the U.S. Army, and earned his MBA from The University of Arizona. Michael has served as a major conference panelist and is the author of Cash Flow Rich, Winning Ways to Evaluate and Finance Real Estate. Today, he helps business owners get more work group engagement as President and CEO of Shelton Business Services, LLC in Scottsdale, Arizona. Disclaimer: I don't offer investment, legal or tax advice. Talk to your broker, accountant or lawyer for investment, tax and legal help. I might own stock in the companies I mention on-line. My posts, tweets and other on-line activity are my personal thoughts and don't represent my employer or company.
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