Private loans usually get declined for a handful of reasons, and almost all of them are about the deal rather than the borrower: not enough equity, an exit that does not hold together, a title problem, value the lender cannot support, an incomplete file, or a timeline the loan cannot meet. Most can be fixed or at least anticipated if you know what the lender is looking for.
We do not approve every request, and no lender should promise to. Every application is reviewed individually, and not all are approved. Here is how we see the common reasons, and what you can do about each.
Not enough equity
Private lending is equity-led. If the amount requested is too close to what the property would sell for, there is little room for error if something goes wrong. Lenders are conservative on purpose, because they may have to recover the loan from the property.
How to fix it: request a smaller loan, bring more cash to the closing, or bring in additional collateral. Run the numbers on a conservative value, not the most optimistic one. Construction is different in structure, with financing up to 90% of construction cost, but the same logic applies: the project still has to make sense.
An exit that is vague or unrealistic
Every private loan is temporary. A lender asks how it gets repaid, and answers like "I will refinance" or "I will sell for a profit" need substance behind them. A refinance that depends on income the property does not yet earn, or a sale that depends on an optimistic price, is a weak exit.
How to fix it: write down the plan with a realistic timeline and a backup. Our article on exit strategies for a bridge loan covers how to build one that holds up.
Title problems
Unexpected liens, ownership disputes, unreleased prior loans or recorded items that affect use can stop a loan. Title issues are among the most common surprises because borrowers often do not read the report until late.
How to fix it: order title early and read it. Many items can be cleared with a payoff, a release or a corrective document, but that takes time. See our guide to title reports.
Key takeaways
- Most declines trace to the deal: equity, exit, title, value, completeness or timing.
- The earlier a weakness is disclosed, the more options there are to fix it.
- A smaller request, a stronger exit plan or cleaner documents can change the answer, though approval is never guaranteed.
Value the lender cannot support
If the price you are paying or the after-repair value you are projecting is higher than comparable sales support, the lender will rely on its own number. That can leave the loan smaller than you hoped.
How to fix it: bring recent comparable sales and a clear scope of work. Be realistic about what the market will pay. Read how private lenders value a property to see how we approach it.
An incomplete file
Missing contracts, unsigned authorizations, unanswered questions and surprise disclosures slow files down, and sometimes stop them. A file that cannot be completed in time may be declined simply because the deal will not wait.
How to fix it: use our document checklist and send the package at the start.
A timeline mismatch
Private lending can be fast. We can offer approval in as little as 24 hours and funding in as little as seven days, subject to a complete file, underwriting, title review and property valuation. But if a deal needs to close in three days and the property needs a valuation and a title review, the schedule may simply not fit.
How to fix it: talk to the lender before you commit to a closing date, and ask for an extension in the contract if you can.
A word on credit
Underwriting here is led by equity, capacity to make payments and exit, not by credit score alone. Credit still provides context, and it may affect pricing or structure. That is not usually the reason a file fails; the problems above are.
What to do if you are declined
Ask what the specific concern was and whether any change would address it. A smaller loan, additional collateral or more time might turn a no into a yes. If a different program is a better fit, such as our private loan options or a conventional lender, we will tell you.
Not sure whether your deal will hold up? Call (800) 943-1314 or start an application. General information only, not legal, tax or investment advice.
Published by the US Lending & Company underwriting desk. General information only — not legal, tax or investment advice.