The Unicorn Loan: Why Borrowers Must Be Prepared to Accept a "Hard-to-Come-By" Yes

The Borrower's Blind Spot

• The Problem: Borrowers often assume the lending market is homogeneous: if one lender says "Yes," five more are around the corner offering better terms.

• The Reality (The "Haystack"): For niche properties (rural, unique collateral, probate, etc.) or smaller loan amounts, the market is not homogeneous. You, the broker, just found a needle in the haystack—a lender willing to fund a highly specific, high-risk, low-volume deal.

• The Fatal Flaw: The borrower gets the "Yes," then starts "tire-kicking," seeking minor improvements in rate or points, not realizing the first "Yes" may be the only one available.

• 
  

When a "Yes" is a Victory, Not a Starting Point

• The Specialist Premium: Explain that lenders who fund deals banks won't touch (like your rural/probate example) are specialists who price their risk accordingly.

• Risk-Based Pricing: This specialist "Yes" often comes with:

  • Higher Interest Rates: Due to the illiquidity or location risk of the collateral.

  • More Points: To compensate for the low volume and high upfront due diligence costs.

  • Tighter Terms: Shorter loan periods, stricter construction draw schedules, or a larger reserve requirement.

• The Value of the Loan: Shift the borrower's focus from the interest rate to the value of the opportunity. If the loan unlocks a probate property worth $100K in equity, does an extra 0.5% interest really matter?

• 
  

Why Other Lenders Will Say No

• The "Rule of Five" Doesn't Apply: Detail why other lenders turn down these deals:

  • Collateral Liquidity: They fear the low volume of buyers in a rural market.

  • Small Loan Size: For many funds, a $40K loan is below their minimum threshold; the administrative cost is too high relative to the interest income.

  • Lack of Familiarity: Lenders stick to geographic areas or asset types they know well. Your single private lender had the unique tolerance for that specific risk.

  • 
    

The Call to be Prepared to Accept

• The Mindset Shift: Tell borrowers they must be prepared to accept the first qualified "Yes" they receive, understanding that those terms reflect the genuine risk of their project in the current market.

• The Broker's Frustration: Share your pain. You did the hard work of finding the unicorn lender, and the borrower's hesitation wastes the time of a valuable industry resource (the private lender).

• Actionable Advice: The Deadline: Impress upon the borrower that a private "Yes" often comes with an implicit deadline. The lender's commitment can vanish quickly if the borrower appears indecisive or uncommitted.

• 
  

Seize the Opportunity

• Final Thought: If you have an unusual property or complex situation, your focus should be on speed and certainty of closing, not on haggling for marginal rate improvements.

• Your Final Plea: Don't be the investor who walks away from the only "Yes" they'll ever get because they weren't prepared to accept reality.