Educational Guide
Commercial lending connects businesses with capital. Understanding the process—from application to funding—and the roles of borrowers, lenders, brokers, and referral partners helps advisors and vendors participate effectively.
Commercial lending follows a general flow, though timing and requirements vary by lender and product.
The borrower applies for financing—directly to a lender or through a broker or referral partner. Application requirements vary: financials, bank statements, credit authorization, and deal specifics.
The lender or financing partner evaluates the application. Factors include credit, revenue, time in business, cash flow, collateral, industry, and deal structure. Each lender has different criteria.
The lender approves, declines, or requests additional information. Approval is not guaranteed. Criteria vary; what one lender approves, another may decline.
If approved, the borrower reviews terms, signs documents, and closes the transaction. Closing requirements vary by product and lender.
The lender disburses funds. The financing partner receives its commission or revenue. Referral partners may receive compensation per the referral agreement.
Referral partners—brokers, vendors, CPAs, consultants—introduce businesses to financing partners. They do not broker the loan. The financing partner evaluates the opportunity, identifies possible funding paths, and matches the deal to a lender. The referral partner stays informed but does not handle underwriting, documentation, or placement.
When a deal funds, the referral partner may receive compensation per the referral agreement. See referral fee structures and when referral commissions are paid. The referral partner must have a signed agreement before submitting deals.
Lenders consider multiple factors. Credit score, revenue, time in business, cash flow, collateral, industry, and deal structure all influence the decision. Criteria vary by lender and product. Traditional banks often require stronger credit and more documentation. Alternative lenders may have broader credit standards and faster processes. Equipment financing lenders focus on the equipment and its value. Each deal is evaluated on its merits; no approval is promised.
When a business is declined by one lender, second look lenders may evaluate the opportunity. Different credit boxes and program guidelines create options. Brokers and referral partners can send declined deals for review.
A decline from one lender does not mean no options exist. Lenders have different credit boxes, program limits, and risk appetites. Second look lenders review deals declined elsewhere and may consider them based on different criteria. Brokers, vendors, and advisors can submit declined deals through referral partner networks.
Each opportunity is evaluated on structure, revenue, collateral, and other factors. No approval is promised. The referral agreement defines the process. Partners should review declined deals and hard-to-place business loans resources for context.
Commercial lending timing varies by lender and product. Traditional bank loans may take several weeks. Alternative lenders and equipment finance companies may fund in days. The financing partner can provide timing expectations for specific opportunities.
Referral partners should set realistic expectations with borrowers. Evaluation does not guarantee approval. The process depends on lender criteria, documentation, and deal structure. Understanding how commercial lending works helps referral partners communicate effectively with clients and manage expectations.
FAQ
The borrower applies for financing, either directly or through a broker or referral partner. The lender or financing partner evaluates the application based on credit, revenue, collateral, and other factors. If approved, terms are offered and the borrower closes. Funds are disbursed. Each lender has different criteria; approval is not guaranteed.
Borrowers (businesses), lenders (banks, alternative lenders, equipment finance companies), brokers who arrange deals, referral partners who introduce opportunities, and financing partners who evaluate and place deals. Roles vary by transaction.
Referral partners introduce businesses to financing partners. They do not broker the loan. The financing partner evaluates the opportunity, matches it to a lender, and handles placement. Referral partners may receive compensation when deals fund, per the referral agreement.
Lenders consider credit score, revenue, time in business, cash flow, collateral, industry, and deal structure. Criteria vary by lender and product. Some programs have broader credit standards; others require stronger profiles. Each deal is evaluated on its merits.
A decline from one lender does not mean no options exist. Second look lenders may evaluate deals declined elsewhere. Brokers and referral partners can submit declined deals for review. Each opportunity is evaluated based on structure, revenue, and other factors.
Timing varies by lender and product. Traditional bank loans may take weeks. Alternative lenders and equipment finance companies may fund in days. The financing partner can provide timing expectations for specific opportunities.
Have a deal to refer?
Review the referral agreement and submit opportunities for review.
