By Spencer Thomas, MBA — Founder & CEO, Thomas Capital Holdings | Director of Commercial Lending, Epic Mortgage
July 3, 2026

After nearly two decades in private banking and commercial lending and hundreds of loan requests reviewed from both sides of the table I can tell you that most commercial financing deals don't die because the property was bad or the borrower was unqualified. They die because of avoidable, self-inflicted mistakes in how the request was prepared, packaged, and presented. The frustrating part? The same mistakes show up over and over, whether it's a f irst-time investor buying a fourplex or an experienced sponsor refinancing a $20 million portfolio. Here are the eight I see most and how to avoid every one of them

1. Shopping Rate Instead of Certainty of Execution
The most expensive loan you'll ever get is the one that doesn't close. Borrowers love to chase the lowest quoted rate, but a quote is not a commitment — it's marketing. A lender offering 25 basis points less who retrades you at committee, drags diligence past your contract deadline, or cuts proceeds two weeks before closing will cost you far more than that rate savings: lost deposits, blown rate locks, dead deal costs, and a damaged reputation with the seller and broker community. Sophisticated borrowers ask different questions: What percentage of your term sheets actually close as issued? Who makes the credit decision, and have they seen this deal? What's your realistic timeline from application to funding? Certainty and speed of execution are worth real money. Underwrite your lender the way they underwrite you.

2. Showing Up With Incomplete Financials
Nothing signals "inexperienced borrower" faster than a loan request that arrives as a trickle of half-answers. Every commercial lender is going to want essentially the same core package: a current personal financial statement, two to three years of tax returns (personal and entity), a trailing-12-month operating statement, a current rent roll, a schedule of real estate owned, and a clear sources-and-uses for the transaction. When that package arrives complete, organized, and consistent on day one, two things happen: your deal moves to the top of the pile, and the lender's confidence in you as an operator rises before they've even opened the rent roll. When it arrives piecemeal over six weeks, your deal stalls behind every borrower who did it right and every inconsistency they find on their own becomes a credibility problem instead of a footnote.

3. Not Understanding What the Lender Is Actually Underwriting
Most borrowers fixate on loan-to-value. Lenders fixate on debt service coverage. In today's rate environment, the constraint on your proceeds is almost never the 75% LTV in the marketing flyer — it's whether the property's net operating income covers the proposed debt service at the lender's underwriting rate, typically with a 1.20–1.25x cushion. Borrowers who don't understand this get blindsided when their "75% LTV loan" comes back at 62% of purchase price. Run the DSCR math yourself before you ever apply: take the actual (not pro forma) NOI, divide by the annual debt service at a stressed rate, and see what proceeds that supports. And remember that many lenders — especially banks also underwrite your global cash flow: every property, every guarantor, every obligation. A weak asset elsewhere in your portfolio can sink the deal in front of you
4. Underwriting the Dream Instead of the Actuals
Your pro forma says rents are 20% below market, expenses are bloated, and NOI doubles in 18 months. You might even be right. But lenders fund what is, not what could be — in-place income, trailing actuals, current occupancy. When borrowers lead with an aggressive pro forma and treat the actuals as a footnote, lenders discount everything else in the package, because they now suspect optimism has contaminated all of it. The right move is the opposite: present conservative actuals as the basis for the loan, then present the upside case separately as evidence of your business plan. If the value-add story is real, that's a conversation about bridge debt or future earn-outs — not a reason to inflate the stabilized numbers on a permanent loan request.
5. Approaching the Wrong Type of Lender for the Deal
Banks, credit unions, agency lenders, CMBS shops, debt funds, SBA lenders, and private capital all have different boxes — and a deal that's a layup for one is an automatic decline for another. A 55%-occupied value-add deal doesn't belong at a community bank that wants stabilized cash flow. An owner-occupied business property with strong financials shouldn't be paying debt-fund pricing when an SBA 504 exists. A borrower who needs to close in three weeks has no business in the CMBS pipeline. Every declination costs you time, and in some cases a credit pull — and shopping a deal to ten wrong lenders can burn your deal's reputation in a market where lenders talk. Know the box before you knock on the door, or work with a capital advisor whose job is knowing which door to knock on.
6. Ignoring Prepayment Penalties and Exit Flexibility
Borrowers negotiate the entry and ignore the exit. Then they get an offer to sell in year three and discover their loan carries yield maintenance or defeasance that costs them six figures — sometimes seven — to escape. Prepayment structure should be matched to your business plan before you sign the term sheet. Planning to sell or refinance after a value-add? Step-down prepay or a bridge structure with minimal lockout matters more than 15 basis points of rate. Holding long-term for cash flow? Then yield maintenance may be a fair trade for better pricing. There's no universally "good" structure only structures that fit or f ight your exit plan.
7. Hiding the Warts
Past bankruptcy. A foreclosure in 2010. Pending litigation. A tax lien from a dispute you eventually won. Borrowers hide these things hoping they won't surface. They always surface lenders run background, credit, litigation, and lien searches on every guarantor as a matter of routine. Here's the thing most borrowers don't understand: disclosed early with context, most issues are manageable. A 2010 foreclosure with a clean 15-year track record since is a paragraph in the credit memo. That same foreclosure discovered by the underwriter in week six is a character problem and character problems don't get exceptions, they get declines. Lead with the wart and the explanation. It converts a landmine into a footnote.
8. Underestimating the Cash It Actually Takes
The down payment is only the opening bid. Real transactions also require closing costs (typically 2–4% of the loan), lender-required reserves for taxes, insurance, and capital expenditures, interest reserves on bridge deals — and, most overlooked of all, post-closing liquidity covenants. Many lenders require guarantors to show liquidity equal to 6–12 months of debt service and net worth equal to the loan amount after the deal closes. Borrowers who arrive with exactly the down payment and nothing behind it don't just fail the covenant — they signal fragility. Build your capital plan around the full cash requirement plus a cushion, or raise the difference before you go to market. Scrambling for the last $150K in week five is how good deals die at the finish line.
The Common Thread
All eight mistakes share a root cause: borrowers treating financing as an afterthought — something to figure out after the deal is found — instead of a discipline to master before it. The best sponsors I've worked with do the opposite. They know their DSCR before the lender does, they've packaged their financials before they need them, and they've matched the capital source to the business plan from day one. They don't get better loans because they're luckier. They get better loans because they're prepared — and lenders can tell within ten minutes which kind of borrower they're dealing with.
Preparing a Financing Request?
Thomas Capital Holdings provides capital advisory services for commercial real estate investors and operators, and through Epic Capital, direct access to commercial lending solutions across multifamily, mixed-use, and commercial asset classes. If you're preparing a financing request or recovering from one that went sideways let's talk.
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