What Lenders Say… and What They Really Mean
If you’ve been in commercial real estate long enough, you’ve likely sat through more than a few lender conversations that checked every box—until they didn’t. One minute everything sounds locked in, the next you’re chasing answers days before closing, wondering where the certainty went.
The reality is, commercial lending comes with its own language—one that doesn’t always mean what it sounds like. And as seasoned developers and investors, you know how critical it is to read between the lines. Because protecting your timeline, capital stack, and reputation starts long before term sheets hit your inbox.
So, let’s cut through the noise and unpack what’s actually being said.
“We’re still waiting on final approval.” Translation: We don’t have the money, or the authority to give you a yes. You’re not the priority. This is often code for internal indecision or stalling—especially if they’ve been saying this for more than a week. It’s a soft way to keep you in the pipeline without committing.
“This looks good—we just need one more sign-off.” Translation: Expect delays or changes. The deal isn’t real until the docs are out. Don’t assume the deal is done. “One more sign-off” can turn into several, and it’s not uncommon for terms to shift during that wait.
“We can fund in 24-48 hours.” Translation: Only if all conditions are met and they actually control capital. It sounds great on a sales call, but unless the lender has full authority and you’re already approved, it’s rarely true. Fast closings happen, but not because of slogans—they happen because the lender is organized and well-capitalized.
“We’re very relationship-driven.” Translation: If you’re not already a client, you may be chasing them. This is often said to smooth over a lack of responsiveness. While relationships are important, it shouldn’t be a barrier to doing business. If you hear this early, be prepared for some legwork unless you already have history with them.
“This is a creative structure” or “custom program.” Translation: It’s probably not real yet. These phrases are sometimes used to dress up something that hasn’t been fully vetted or approved internally. Proceed with caution, especially if the structure sounds overly complex for a straightforward deal.
“We don’t charge upfront fees.” Translation: That’s great—but look out for surprise fees later. This is actually a good sign—on the surface. But many non-transparent lenders will just relabel upfront costs as “document prep,” “processing,” or “due diligence” fees. Always read the fine print.
Red Flags to Watch Out For in 2025
As we move through 2025’s increasingly complex lending environment, it’s more important than ever to recognize the warning signs before committing to a funding partner. The wrong move can cost you more than just time—it can derail a project, drain your resources, and damage hard-earned credibility. Whether you’re structuring a bridge loan or raising capital for ground-up development, keeping an eye out for these key red flags can help you avoid costly missteps and align yourself with lenders who actually perform.
🚩 1. Non-Refundable Upfront Fees
This is the biggest red flag. If someone’s asking for a non-refundable fee just to look at your file, run. These fees are often how non-legit players make their money—collecting cash up front with zero intent (or ability) to actually close your loan.
🚩 2. Too-Good-To-Be-True Terms
If the rate, timeline, or loan-to-value sounds unbelievably good… it probably is. This is classic bait-and-switch territory. You’ll see great terms in the pitch, but by the time the documents come out, the deal’s been reshaped—and not in your favor.
🚩 3. Lack of Transparency
If the lender dodges questions or avoids giving you clear documentation, that’s a problem. Solid lenders will explain their process, provide written quotes, and give you a list of exactly what they need. Anything less is suspect.
🚩 4. No Verifiable Track Record
There are a lot of new or unlicensed players in the private lending space. Some are fine—many aren’t. If they can’t show closings, references, or testimonials, you’re gambling. Ask to speak to recent borrowers. A good lender will welcome that request.
🚩 5. Changing Terms Late in the Game
You get a term sheet, start the process, and then—bam—the terms change the week of closing. This usually signals weak capital backing or a bait-and-switch strategy. Solid lenders stand by their quotes unless something material changes on your side.
🚩 6. No Clear Capital Source
If a lender can’t explain where their funds come from (their own balance sheet, warehouse line, or fund), that’s a bad sign. It likely means they’re brokering the deal out—or worse, they don’t really have control over the money.
🚩 7. Overpromising on Timelines
“We can close tomorrow” sounds great… unless it’s a lie. If they don’t already have your underwriting, documents, and funding authority in hand, it’s pure fiction. True fast closers won’t brag—they’ll just execute.
🚩 8. Excessive Documentation for a Private Loan
One of the benefits of private lending is streamlined underwriting. If they’re asking for full tax returns, business financials, and five years of bank statements, it might be a disguised bank-prep deal or a middleman who’s not truly private.
🚩 9. No Client Testimonials or References
Would you work with a contractor who couldn’t show past work? Same logic applies. A reputable lender should have a list of past clients or projects they’ve funded. If not, proceed with extreme caution.
🚩 10. Unlicensed or Operating in Gray Areas
Depending on your state, lenders may need to be licensed or follow certain regulatory guidelines. If they’re operating in a legal gray area—or openly skirting disclosure requirements—it puts your deal (and your reputation) at risk.
Final Thought
Commercial lending can be full of opportunity, but it’s also filled with noise. Knowing how to decode the language and spot the red flags can save you time, money, and stress. Ask the hard questions. Push for clarity. And above all—trust your instincts. If something feels off, it probably is. There are good options out there. You just need to know how to find them.