Loan Closing: Key Considerations and Friction Points

Loan Closing: Key Considerations and Friction Points

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Avoiding Delays: Key Considerations During Loan Closing

Once you’re moving toward closing, the process becomes more detailed, and that’s where small oversights can create unexpected delays.

Understanding a few key considerations ahead of time can help you stay in control and avoid common friction points.

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Not All Lenders Work the Same Way

Every lender has a slightly different closing process and some may require additional documentation, involve more third parties, or have longer timelines depending on the structure of the loan.

Most closings will include similar documents such as:

• Legal and entity documentation
• Insurance requirements
• Lease and landlord coordination
• Financial verification
• Third-party approvals

If you’re early in the process and evaluating lenders, asking what’s required to close is one of the most useful questions you can ask.

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Lease and Landlord Coordination Can Take Time

Your lease plays a central role in closing and often requires coordination with your landlord.

Common considerations:

• Lease term must align with loan requirements
• Landlord agreements may require negotiation
• Approvals and signatures can take time

Even when everything else is ready, landlord-related items can hold things up if not started early.

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Insurance Isn’t Instant

Insurance, especially life insurance when required, is one of the most underestimated steps.

It may involve:

• Underwriting
• Medical exams
• Policy approval and assignment

These steps can take time, and they’re often outside of your lender’s control.

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Refinances and Acquisitions Have Extra Steps

If you’re refinancing or purchasing a business, expect a few additional requirements:

• Payoff letters from existing lenders
• Good standing letters
• Coordination between multiple financial institutions

These documents must meet specific criteria, and aren’t always delivered quickly, so early requests matter.

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Your Financial Profile Still Matters

Even late in the process, your financial profile is still being evaluated.

To avoid issues:

• Don’t take on new debt
• Avoid large or unusual purchases
• Maintain liquidity and account stability
• Unexpected changes can delay or even impact final approval‍

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Different Loan Types, Different Requirements

Your loan structure also affects what’s needed at closing:‍

New units: construction contracts, buildout timelines

Purchases: executed agreements, possible escrow

Refinances: lender coordination and payoff documentation

SBA loans: additional documentation like equity injection verification

Understanding these early helps you plan ahead and avoid last-minute requests.

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‍Closing Is a Team Effort

Closing involves multiple parties, and progress depends on coordination across all of them.“If you’re not sure about something, or if you should communicate it, err on the side of transparency.” says Maria Scardina, Senior Director of Loan Operations at ApplePie

The keys shared by successful borrowers would be:

• Stay engaged throughout the process
• Follow up proactively when needed
• Treat closing as a partnership, not a handoff^‍

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Final Thought

Delays during closing aren’t random, they’re usually tied to a small number of known factors. By understanding where friction tends to occur and planning ahead, you can avoid unnecessary setbacks and move more confidently toward funding.

For a more in-depth look, the recording of the  Best Practices for a Smooth & On-Time Close webinar can be viewed here.

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