Article by Roger Schlueter, MBA
Congratulations! You have a Bank Approval for your Business Loan. Your Banker has told you verbally that your business loan was approved. They are just waiting on the Underwriter to Finish Up the Approval or Process.
I Hate to Break It To You but “Your Loan Has Not Been Approved”. Your Loan is Not Approved Until You Sign Your Loan Documents! You should always get the approval in writing. Even if the approval is in writing, it is usually written with so many ways out for the banker and many Written Loan Approval Confirmations have a disclaimer at the end of the Letter that will say that this approval can be denied for several reasons.
Statements in the Approval Letter:
1) Approval Contingent on the Building or Business or Equipment Appraising at the agreed upon Amount and be acceptable to the bank.
2) The amount of agreed upon Equity will be put into the project.
3) All Hazard and other Insurance will be acceptable to the bank.
4) “These Conditions are only general terms on which the loan will be extended and is not an exhaustive statement of terms and conditions of the loan.”
The Catchall of coarse is number 4, where the bank says there may be additional terms and conditions that are not included in this letter.
The Written Approval Letter will give you some security but most will not hold up for you in Court. The letter is better than a verbal approval which for some banks is the only approval you will get. You can of course have your Lawyer call their Lawyer and pay an enormous amount of money to get an absolute approval, but this could jinx the Deal, or Slow the Approval or Loan Process Down to a Snails Pace.
Just Remember: THE LOAN IS NOT APPROVED UNTIL YOU SIGN THE LOAN DOCUMENTS!!!
Please address any questions or comments though the blog or email me directly at roger@rogerschlueter.com