General Underwriting &

Documentation Requirements

“We look forward to closing your loan, or if we can’t do it, giving you a quick no.”

Brock Freeman
Chief Operating Officer

Take a few minutes to review our process and what we require for each stage of underwriting. Investing a bit of time now can save you a lot of time later and help you close your loan faster and smoother.

Loan Process Stages

  • If you don’t yet know if we will accept the “challenge” on your loan, use this very short scenario submission form to get a rapid yes/no answer. Documents are helpful but not necessary.

    Response Target: 1 business day.

  • Complete the Quick Application to give our underwriting team enough information to issue a written quote to you. Should take about 5 minutes to fill out.

    We ask for more information than other lenders. This helps us to complete more due diligence and give you a more reliable quote to share with your client. The quote will include rate, LTV, fees, and estimated cash to close or cash out.

    Documents are helpful, but not required.

    Response Target: 2 business days.

  • We close a high majority of the loans for which we issue Term Sheets. To evaluate the loan during Term Sheet Underwriting, we look for a loan request narrative outlining key facts, opportunities and risks, timeline and exit plan, the borrower and property financials and background (i.e., PFS & SREO, P&L / pro forma, rent roll) that should already be ready if the borrower is serious about moving forward with a loan, along with our full application online.

    As a short-term bridge lender, our goal is for the borrower to successfully exit our loan by qualifying for the long-term financing that you as a broker transition them to. When we see that clear pathway, we move forward with issuing a Term Sheet.

    We first send the Term Sheet to you, so you can check your fees and terms. After you approve, the Term Sheet is sent to the borrower, with you copied. Once the borrower approves, they pay the $895 Due Diligence fee and the property valuation fee.

    Response Target: 4 business days.

  • We focus on flexible, unconventional, and creative loan solutions. We may take on more risk in certain areas, such as high vacancy in a property or poor borrower credit.

    To counterbalance this, we look for offsets such as borrower "skin-in-the-game", property investment experience, liquid and semi-liquid assets that can be used if needed, and other mitigating factors.

    We review the borrower's claims for a high say/do ratio. To balance risk, for example, can the challenges on the property can be offset by a borrower with experience. Alternatively, for borrowers with financial or credit issues, including taxes, is there enough equity in the property to provide cash-out to solve these issues.

    There is a $995 underwriting fee that will be paid at closing.

    Response Target: 4 business days on submitted documentation.

    Paid Terms Sheet to Closing Target: 3 weeks.

Items Required for Term Sheet Underwriting

When you are ready for us to start Term Sheet Underwriting, here is what we need.

  • Our full loan application online (your entries from the quick app / loan quote request will carry over).

  • Personal Financial Statement & Schedule of Real Estate Owned for each guarantor (including history if needed to prove 2-year investment experience on investment properties); dated within 90 days of projected closing date.

Investment Properties:

Property Financials: 12-months P&L (may be waived on purchase if seller refused to provide), Pro Forma (2-year forward-looking forecast) complete with income and expenses, and Rent Roll.

What we are looking for: We will accept a DSCR of less than 1.0 during the KCG loan; however, we expect the property to qualify for standard long-term financing terms with a DSCR of 1.2 or higher by the end of the 12 months of the KCG bridge loan.

Owner Occupied Properties:

Business Cash Flow, Profit & Loss, and Balance Sheet Statements for Last Year, and Current Year-to-Date.

What we are looking for: A borrower in business for at least two years and can show us how they will service the payments and qualify for typical long-term financing terms to exit our bridge loan in 12 months.

Purchases:

Also should include the Purchase & Sale Agreement.

Uploading other documents you have on hand will help speed things up and lessen surprises Post-Term Sheet.

Items Required Post-Term Sheet

Post Term Sheet, it’s time for due diligence. This is done with broker & borrower-supplied items and information from external sources.

Here is what we are looking for from you and the borrower:

Entity & Personal

  • Signed Borrower Authorization and Certification for each guarantor, and IRS tax transcript authorization for each guarantor.

  • Last 2 years Federal Tax Returns for each guarantor.

  • Last 2 years Federal Tax Returns for entities required to file; and for owner-occupied properties, on the entity producing income that will support the debt payments.

  • Personal and entity bank or other liquid asset statements.

  • Entity legal formation and registration documents.

What we are looking for: we don't have any fixed global Debt-to-Income (DTI) ratios, and we remain flexible when assessing borrowers' finances; however, we need to see tax returns and bank statements to ensure taxes are being filed and paid, and to prevent fraud.

Property

  • Investment properties: lease agreements (or estoppels).

  • Planned rehabs: rehab summary, budget, and plan; contractor renovation bids may be required in some cases.

  • Loan broker’s written explanation of exit plan from KCG loan, including target lender name and program. Not required on multifamily properties.

  • Property & general liability insurance coverage; builder’s risk coverage as necessary.

  • KCG Environmental Questionnaire

We will be obtaining the following items:

  • Property Valuation for loans under $750k, obtained from Clear Capital. Full appraisal is required for larger loans. Report is shared with broker and borrower.

    • Existing, recently completed appraisals may be accepted on purchases with KCG approval.

  • EnviroPreScreen from CREtelligent.

  • Refinances: title commitment and escrow setup via Res/Title.

  • Credit Report; Bankruptcies, Liens & Judgments Search.

    • What we are looking for: 600+ Credit Score (or mitigating factors); no bankruptcies or foreclosures in last 5 years.

  • Criminal Background Check

  • IRS tax transcripts and account status, via TaxStatus.

    • What we are looking for: borrower has filed taxes; tax due, if any, matches borrower PFS..

  • Owner-User / Owner-Occupied properties: business account balances and transaction history via Instant Bank Verification (IBV) (microbilt.com).