When it comes to closing a commercial real estate loan, borrowers and brokers often focus on the obvious: rates, collateral, and timelines. But one overlooked step can make the difference between a delayed closing and a smooth one: creating and maintaining a clean special purpose entity (SPE).
At Enact Partners, we frequently see how a well-prepared SPE gives both lenders and title companies the clarity they need to move forward efficiently. For borrowers and brokers, it creates efficiency and helps loans close faster.
Clarity Comes With Structure
An SPE separates the property from other business or personal assets, making it easier for lenders to secure the loan and for title companies to verify ownership. That separation reduces questions and eliminates complications that can slow the deal.
Well-drafted SPEs are often designed to be bankruptcy remote. This means the entity is structured so that unrelated financial issues are less likely to affect the loan. While no structure can remove all risk, bankruptcy-remote features give lenders confidence that the property stands on its own.
The Documents That Keep Loans Moving
No matter the entity type, lenders and title companies expect to see certain items before closing. Having them ready is what keeps the process on track.
For LLCs (most common):
- Articles of Organization filed with the Secretary of State
- Operating Agreement outlining ownership and authority
- EIN (Employer Identification Number) from the IRS
- Certificate of Good Standing (sometimes requested to confirm status)
- Bank account in the LLC’s name
For Corporations:
- Articles of Incorporation filed with the Secretary of State
- Bylaws governing corporate operations
- EIN from the IRS
- Certificate of Good Standing
- Bank account in the corporation’s name
For Trusts:
- Trust Agreement establishing the trust and trustee authority
- Any amendments or restatements to the trust
- EIN (required if the trust will receive loan proceeds)
- Bank account in the trust’s name
For All Entity Types:
If proceeds from the loan are being disbursed at closing, title will only wire funds into the SPE’s account. Without it, funding stops until the account is in place.
Where Brokers Add Real Value
Brokers are in a unique position to prepare clients before a deal ever reaches underwriting. By ensuring borrowers have the right entity and documents in place, brokers prevent delays, improve credibility with lenders, and move the process forward. For brokers working with firms like Enact Partners, this preparation strengthens their role as trusted advisors.
Owner-Users: Why a Lease Still Matters
For business owners financing property they also occupy, an SPE provides structure and transparency. By holding the property in the SPE and creating a lease between the operating company and the SPE, the relationship becomes formalized. The business records rent as an expense, and the property entity records it as income. This separation strengthens underwriting, improves clarity for future investors, and protects both sides of the business.
Preparation Equals Speed
Loan processes are often slowed not by the property or terms, but by missing documents and unclear ownership structures. Borrowers and brokers who make SPE setup part of their checklist avoid these pitfalls. When the right entity and documentation are in place, title and underwriting can move forward without hesitation, making closing faster and more predictable.
What to Have Ready Before You Apply
- A properly formed SPE (LLC, corporation, or trust)
- Governing documents (Operating Agreement or bylaws, or Trust Agreement)
- EIN and Secretary of State filings
- An active bank account in the entity’s name
- Lease agreements if the borrower’s business also occupies the property
At Enact Partners, we view preparation not as paperwork but as a foundation for speed and certainty in commercial lending. A well-structured SPE gives borrowers and brokers the clarity they need to keep deals moving forward.
