When it comes to commercial lending, especially in this competitive market, speed and precision can be the difference between a closed deal and a lost opportunity. Yet even the most promising loans can stall when documentation is incomplete, inconsistent, or inaccurate. For borrowers, delays mean lost time and potential revenue. For credit unions, they can result in missed opportunities, strained member relationships, and unnecessary exposure to risk.
We’ll explore the most common documentation pitfalls that disrupt the lending process, how they affect both borrowers and lenders, and how credit unions can address them without compromising their risk management standards.
1. Incomplete Financial Statements
Financial statements are the backbone of any loan application. Missing tax returns, outdated profit-and-loss statements, or incomplete balance sheets make it difficult for underwriters to assess repayment ability.
Nonbank online lenders are becoming a growing source of small-dollar credit for small businesses. As the Federal Reserve Banks’ Small Business Credit Survey (SBCS) indicates, nearly one-third (32%) of small businesses that applied for credit in 2018 sought it from an online lender, up from 19% in 2016 and 24% in 2017. Many of these fintech lenders offer products such as lines of credit, fixed-term loans, or merchant cash advances with daily or weekly repayment schedules. These alternatives can be attractive to borrowers facing delays with traditional lenders, often caused by incomplete or outdated documentation.
When a borrower submits partial information, underwriters are forced into a holding pattern, either chasing missing data or placing the file on hold. This not only slows the approval process but also risks losing the deal if another lender can close faster.
CBS Tip: A clear, upfront checklist can prevent this bottleneck. CBS works with credit unions to establish standardized documentation requirements that align with regulatory standards, ensuring that the underwriting team has the complete picture from the start.
2. Unverified Tenant and Lease Information
In commercial real estate (CRE) lending, especially for income-producing properties, tenant stability and lease terms often carry as much weight as borrower creditworthiness.
Missing or outdated lease agreements, incomplete rent rolls, or unverified tenant credit grades can derail an otherwise strong loan file. Tenant defaults or early lease terminations can have a major impact on the projected cash flow of the property, making risk assessments less reliable and potentially triggering loan restructuring or default provisions.
Without this information, credit unions may be forced to pause the approval process until they have a clear picture of the property’s income stability.
CBS Advantage: By conducting detailed tenant credit evaluations and lease reviews, CBS helps credit unions spot red flags early, avoiding last-minute surprises that can stall closings.
3. Inconsistent Collateral Documentation
Collateral analysis is one of the most critical parts of loan risk assessment, but it is also one of the most error-prone. Issues often arise when appraisal reports, property condition assessments, or title work contain inconsistencies or are missing altogether.
As the Appraisal Institute notes, inconsistencies, whether subtle or significant, within appraisal reports can undermine credibility and reliability. Even minor data or methodological errors can cascade into misleading or “completely erroneous” value conclusions, jeopardizing loan decision-making. In practice, this can trigger further review, add days or weeks to the process, and in some cases require a new appraisal altogether.
CBS Support: CBS assists credit unions in reconciling discrepancies, working with appraisers and title companies to ensure all collateral documentation is complete, current, and aligned with loan file requirements.
4. Outdated or Missing Compliance Documents
Regulatory compliance is not optional, and in commercial lending, incomplete compliance documentation can bring the process to a halt. This includes missing environmental assessments, flood certifications, or required borrower disclosures.
When these documents are overlooked or outdated, loan closings can be delayed while the credit union gathers the necessary information. In some cases, missing compliance items can result in additional third-party inspections or re-approvals, adding both time and cost to the process.
CBS Process: Our lending teams integrate compliance checks into the earliest stages of underwriting, ensuring that every document is in place well before closing deadlines.
5. Lack of Document Standardization Across Departments
For credit unions expanding into commercial lending, inconsistencies between branches or departments in document collection and review can cause internal bottlenecks. Without standardization, a loan file can look different depending on where it originates, making it harder for underwriting and compliance teams to process efficiently.
This lack of uniformity can also create vulnerabilities during audits or regulatory reviews.
CBS Partnership: CBS works with credit unions to develop standardized document packages and centralized review processes, improving consistency and reducing delays across the board.
The Ripple Effect of Poor Documentation
Each documentation delay ripples through the lending process:
- Borrowers lose confidence and may seek financing elsewhere.
- Credit unions face operational inefficiencies, strained resources, and possible reputation damage.
- Deals can miss critical market windows, especially in competitive CRE environments.
Given that commercial lending often operates on tight timelines, whether tied to property acquisition deadlines or refinancing windows, documentation errors can be costly.
How Credit Unions Can Get Ahead
Avoiding these pitfalls starts with a proactive approach:
- Create Comprehensive Checklists – Ensure both borrowers and internal teams understand precisely what is required and when.
- Invest in Document Management Tools – Digital platforms can track receipt and review of documents in real time.
- Conduct Pre-Underwriting Reviews – Early checks catch missing items before they stall the process.
- Leverage Expert Partnerships – External specialists can review complex or high-risk documentation more quickly and thoroughly.
CBS supports credit unions in all of these areas, bringing deep commercial lending expertise, market insights, and proven process frameworks that keep deals moving forward without compromising quality.
Why Documentation Discipline Matters
The reality is simple: in commercial lending, a deal is only as strong as its documentation. Incomplete, inconsistent, or outdated files can stall the process, frustrate members, and create unnecessary risk.
Credit unions that address these documentation challenges head-on by standardizing processes, integrating early compliance checks, and partnering with experienced commercial lending experts will position themselves to close more deals more efficiently.
Contact us today to learn how CBS can help your credit union streamline documentation processes, accelerate commercial lending timelines, and deliver a better experience for your members.
Disclaimer. The information and data contained in this multimedia content (the “Content”) are provided for informational purposes only, and do not necessarily represent the views or opinions of Cooperative Business Services, LLC (“CBS”). The Content, and the appearance of the Content on, by or through CBS’ website, email, or technological infrastructure does not constitute an endorsement by CBS, its affiliates, owners, officers, directors, or employees (or their successors and/or assigns). Information in the Content cannot be relied upon by any recipient for any business, legal or financial decisions.
