Permitting Pitfalls: How Permits Affect Your Loan Timeline

In real estate investing, speed is often the difference between closing a profitable opportunity and missing out entirely. But there’s one common issue that can delay funding and derail a project before it even starts: permits.

Whether you’re tackling a ground-up construction project, a major renovation, or even a simple conversion, having the correct permits—or at least a well-defined plan to obtain them—can significantly affect your ability to secure financing, especially from private lenders.

Here’s what borrowers need to understand about permitting and why it matters to your loan timeline.

Why Lenders Care About Permits

Private lenders aren’t just funding properties—they’re funding execution plans. Permits represent forward progress and a level of preparedness that gives lenders confidence the project can be completed on time and within budget.

Without permits in hand, or a clear plan for when and how they’ll be secured, your project presents more risk. This can lead to:

• Delays in approval
• A reduced loan amount
• Higher rates to offset uncertainty
• Or even a denial of funding altogether

3 Key Permitting Scenarios and Their Impact

1. Permits Already Approved

Best-case scenario. If your permits are already approved and ready to go, your project is seen as “shovel-ready.” This can dramatically shorten the underwriting process and allow for quicker funding—sometimes in as little as 7 to 10 business days.

2. Permits in Progress

Many lenders will still consider the loan if permits are in process, but they’ll want to review:

• Where you are in the permitting timeline
• Any feedback or comments from the city
• Whether there’s a history of delays with the jurisdiction

Clear documentation and realistic timelines are critical here. Be honest about where things stand and be prepared to show a track record of moving the process forward.

3. No Permits or Incomplete Plans

This is where things get tricky. If you’re still working with architects, haven’t submitted for permits, or don’t have clarity on zoning or code compliance, the lender may put the loan on hold until that’s resolved.

At the very least, expect additional questions, a longer approval timeline, and possible adjustments to loan terms based on perceived risk.

Tips to Avoid Permitting Delays in Your Loan Process

• Start early. Don’t wait until after you’ve secured financing to begin the permitting process. Starting upfront—even before closing on the property—can help speed things along.
• Work with professionals. Having a knowledgeable architect or permit expediter on your team can prevent costly mistakes and keep you aligned with city requirements.
• Document everything. If your permits are in process, make sure you have application receipts, city correspondence, and a written timeline from your team.
• Communicate with your lender. The more transparent you are about the permitting process, the better your lender can assess the timeline and structure the loan appropriately.

Final Thoughts

In private lending, clarity and momentum matter. The permit process is one of the first ways a lender gauges your preparedness and commitment to the project.

By understanding how permitting affects the loan timeline—and proactively addressing it—you’ll be in a much stronger position to get your deal funded quickly and smoothly.

If you’re planning a project that involves permits, start planning for them now. It could make all the difference in securing the financing you need, exactly when you need it.

Disclosure: TaliMar Financial, Inc. dba TaliMar Financial, CA DRE License 01889802 / NMLS 337721. For information purposes only and is not a commitment to lend. Programs, rates, terms and conditions are subject to change at any time. Availability dependent upon approved credit and documentation, acceptable appraisal, and market conditions.