“Urgent” Project Funding Applications Having “Deadlines” - Clarity on the Issue of “Time Frame.”

"Urgent" applications are a frequent issue in the financing industry. It can be difficult to professionally address this widespread request in a "diplomatic" way that the applicant can understand and appreciate. "Time frame" is the one thing financial corporations and institutions are strictly prohibited from promising or committing to.

There are many variable factors, all outside the control of underwriters, collateral providers and facilitating or managing banking institutions. Under many laws and regulations common to all countries, meeting any "deadlines" of funding applicants is clearly "outside the scope" of legal services.

?For many compelling reasons (detailed below), brokers, underwriters, and service providers must respond immediately to "urgent" inquiries or applications stating, requesting, or even implying" deadlines." It is strongly recommended that "damage control" services be avoided.

The most prudent and appropriate response is immediately letting the applicant or potential client know that the project or transaction application has been declined. This is necessary to avoid and prevent the applicant company from accusing or blaming them for wasting their last-minute "damage control" time left before their deadline.

Institutional Reasons for Disqualifying "Urgent" Applications

Members are advised to understand and always consider the following details on why demands for concise "funding dates" are a "Red Flag," an objective problem, and a mandatory "deal killer" issue in all dealings with potential applicants or clients:

Regulatory Violation - It is illegal, and a license and regulatory violation, for any institutional provider to agree to perform services under implication of appearing to agree to any "funding date." By law, the lending decision can only be made once, and when the project has been completed, the bankable has been made, and collateral has been put in place. Appearing to agree to or target any specific date strongly implies already having a final lending decision that cannot legally be made at this stage, and allowing it to appear (or be potentially perceived) to be as specific as a "funding date" is even much worse of a violation.

Liability Problem - No institutional provider or funding source can allow itself to be perceived or implied to have agreed to any "deadline,", especially about any "consequences" or impending "damages." While a provider is technically not "liable" for anything it has not agreed to and signed, any email correspondence that can be misconstrued or taken out of context can create that liability. There is also the more common "reputational risk" liability of frivolous lawsuits or false, defamatory claims by an angry potential applicant or client who is not entitled to nor owed any such obligation of a deadline.

Undermines Obligations - All authentic funding sources are prejudiced against projects presented as "on fire." Licensed financial services and funding decisions are required by law to be made with "due diligence." Similarly, all funding transactions must be prepared, arranged, and provided with careful, deliberate, systematic, and technical precision. Funding sources tend to (rightfully) strongly resent being treated as a "Chinese fire brigade" and will discredit, disfavour or even disqualify any client, broker or institutional facilitator who asks the source to engage in a blind "mad rush" toward "urgent" funding.

Disqualifying Issue - Funding sources (and even primary underwriters) view "on-fire" projects as "evidence" of a significant disqualifying factor that they typically call "poor management practices" or "reckless mismanagement." Rightly or wrongly (but reasonably and justifiably), they assume the following presumptions:

(1) Reckless "rushing" into signing agreements that the company probably knew it was not in a position to deliver on, as "gambling" on the hopes of pressuring a funding source later, is most likely what caused the "on fire" deadline to begin with;

(2) Mismanagement or incompetence is most likely what prevented the company from seeking licensed support or solutions much earlier when they should have known they needed to prepare to meet their often-imposed deadline when there was still sufficient time to prepare or obtain outside expert answers. Therefore, an applicant company's failure to seek licensed help at a much earlier stage is universally considered an objective disqualifying factor.

Independence of Sources – By force of law, all underwriting firms for preliminary "approval" or certification of applications or banking compliance packages, institutional financial services providers, and funding sources must remain strictly and fully independent. They must maintain freedom of neutral and objective expert, professional and licensed judgment at their sole discretion. It is unlawful to pressure such sources into promises, commitments or obligations targeting deadlines. It is a regulatory "conflict of interest" violation for sources to accept or agree to such pressure. In the worst cases, any client statement indicating "consequences" of failure to meet a deadline could become a legal "liability" for the provider or source, where such "consequences" create pressure or the Mandate implied unlawful "guarantees" of success under threat of liability, technically meet the legal definitions of "criminal extortion" (USA) or "criminal blackmail" (UK).

Client Responsibility—How "fast" any funding transaction can be prepared, structured, arranged, and completed depends heavily upon the client's cooperation and responsiveness. Service providers can only target specific dates if they know how responsive the client is to allowing the necessary licensed preparation work to be completed. That can never be known until it is "too late."

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