What are the main reasons loans are declined?
Lending activities tend to go in cycles and certain asset classes fall in and out of favor with lenders frequently. The main reason loans are declined in with C & G (convenience and gas) loans is because lack of verifiable cash flow. Most of our activities are in acquisition financing and frequently sellers have not declared all of their income which makes verifying all of theirrevenue problematic. Frequently we run out of time because the borrowers have gone to other lenders prior to PetroMAC leaving a short time frame to close their loan. Many borrowers have very poor documentation to present which takesloan officers and processors aninordinate amount of time to present a loan in the best possible light to an underwriter. In the past few years, many more loans have been declined due to the borrowerlacking direct industry experience and borrowing funds for their equity infusions. A percentage of loans are also declined due to environmental issues.
