Tom Hart on the Critical Nature of Transparency in Commercial Lending

The current financial climate has made many lenders and developers alike wary of the lending process. Lenders are reluctant to commit funds to projects, and developers are concerned that they may lose deposits and application fees if their proposals are rejected. We discussed the issue with Tom Hart, co-founder of the respected commercial loan consulting firm Kilpatrick and Hart, Ltd., Inc.

Q: What exactly is meant by transparency in your business?
Tom Hart: Transparency refers to the process being out in the open for all to see. At Kilpatrick and Hart, we have an established funding process, called the 8-step process. It is set forth on our website at, laid out in detail, with every step explained thoroughly.

Q: How would you say your 8-step process makes borrowers less reluctant to apply for a loan?
TH: The first three steps of the process are informal, but everyone goes through them. They are designed to make sure that there is sufficient interest in the borrower’s project. First, we review the borrower’s description of the project, and if we think it is feasible, we will share it with our network of lenders. If there is interest in funding the project, then we will go ahead with the application process, but if there is no interest, we will so advise the borrower. All this is before any deposits or success fees are paid; if there is no interest at this point, the borrower has not lost anything.

Q: How does the 8-step process encourage lenders to participate?
TH: The answer to that is the nearly 25 years of honest dealing we have built up with our network of lenders. They know that we are not going to present them with a project we think is not feasible. In addition, they know that we tell borrowers that there is no guarantee of funding even after lenders have expressed a conceptual interest.