What is a stip, and how do I clear one without restarting the file?

What they are

Stips are the conditions between "approved" and "funded". Common ones:

• An updated bank statement, because the month closed while the file was in process
• Proof of ownership or a signed entity document
• A payoff letter from an existing funder, with a good-through date
• A voided cheque, a bank letter, or verification of the debit account
• A clearer copy of an ID, or a second form of ID
• Proof of insurance with specific endorsements
• A landlord verification or a signed landlord waiver
• A signed subordination or intercreditor agreement with another creditor
• A site inspection or photographs of the premises
• Tax returns, transcripts, or an explanation of a specific deposit
• Termination of a stale UCC filing from a deal you paid off years ago

Some are conditions precedent — no funding until cleared. Some are post-closing items. They are not always labelled, so ask which is which.

How files die in this stage

Not from a single hard stip. From elapsed time.

What the delay actually costs

Handled in one batch, the third-party items go out on the 18th, the insurance certificate arrives on the 22nd, the payoff letter on the 24th, the landlord signs on the 26th, and the file funds before month end on the statements it was approved on.

Handled one at a time — send an item, wait for the reply, send the next — the same six conditions take four or five rounds, each with a queue in front of it. The file crosses month end. The funder asks for the new statement. The new statement shows a slow month, and the file returns to an underwriter now looking at different information from the one who approved it.

Nothing went wrong and nobody was difficult. The deal was resized because a document arrived in October rather than September.

How to clear them properly

1. Ask for the complete list, in writing, at the moment of conditional approval. Not as it occurs to someone. Ask directly: "Is this the full list of conditions to funding?"
2. Ask which are conditions precedent and which can be post-close.
3. Ask what the approval's expiry date is. That is your actual deadline.
4. Start every third-party item immediately, before you have finished the ones you control.
5. Send everything in one batch, clearly named, in one message.
6. Do not renegotiate the deal while clearing stips. Reopening price or size can send the file back for re-approval, and the fresh look happens on today's data rather than the data you were approved on.
7. Keep a copy of what you sent and when. "We never received it" is common and usually genuine.

One warning

If new stipulations keep appearing after each batch is cleared — particularly ones that were foreseeable at the start — you are entitled to ask whether the approval is real. A stipulation list that grows indefinitely is sometimes a sign that the file was approved optimistically, or that whoever is relaying it is not the party making the decision. Ask, in writing, for the remaining conditions in full, and ask who is issuing them.

The stips worth pushing back on

Most conditions are routine, and arguing about them spends the days you do not have. A few are worth a conversation.

• A condition that contradicts your quote. A lower amount, a shorter term or a higher cost appearing as a "condition" is a repricing, not a stipulation. Say so, and ask for a revised term sheet.
• A guarantor who was not in the approval. Adding a spouse, a second owner or a cross-guarantee at this stage is a material change to what you agreed.
• A condition nobody can satisfy. A landlord waiver from a landlord who has already refused in writing, or a subordination from a creditor with no reason to agree. Raise it the day you see it and ask what the alternative is; there usually is one.
• An open-ended condition. "Satisfactory explanation of deposit activity", with no statement of what would be satisfactory. Ask exactly what is being requested.
• A post-closing condition with a penalty attached. Read what happens if it is not met, before you agree to meet it later.

How to tell a stip list from a repricing

Conditions that verify what you already told them are stips. Conditions that change the deal are a new offer wearing the word.

The signals that the second thing is happening: the amount or the cost moves; new parties appear on the paperwork; each cleared batch produces another batch on the same subject; requests start arriving from someone other than whoever issued the approval; or the approval's expiry date passes with no new one issued.

When you see those, ask two direct questions in writing. Is the approval still on the terms I was given, and what is the current expiry date? And is this the complete remaining list of conditions?

An honest answer to either is worth more than another week of document gathering. A refusal to answer either is itself the answer, and the right response is to keep a second file moving in parallel rather than to stop and wait.