Why Unrealistic Sponsors Destroy Their Own Credibility With Lenders

There is a specific type of sponsor who manages to disqualify themselves before underwriting even begins. They insist on 100 percent financing, refuse to contribute equity, refuse to pay for any professional work, and then announce that any advisor who declines their terms is “a scam”. The irony is simple. Their own behaviour is what blocks them from ever being taken seriously by lenders or arrangers.

How Professional Lenders Read Your “No Equity, No Fees” Email

Many of these sponsors genuinely believe they sound confident and sophisticated. In reality, their own wording tells lenders exactly why the deal should be ignored. A typical opening line looks like this:

“We require a facility of 50M USD. We expect 100% financing, no equity from our side, and no upfront fees of any kind.”

On the surface it looks assertive. Underneath, any experienced reader sees immediate problems:

• There is no reference to past track record, audited results, or executed projects.
• There is no discussion of risk sharing, only demands for other people’s capital.
• The sponsor is effectively saying they place zero of their own balance sheet behind the proposal.

When that same sponsor adds:

“If you are real you will work on success fee only and prove you can fund first,”

they confirm to any credit professional that they do not understand basic allocation of cost and risk. That is not strength. It is a loud signal of inexperience.

The Signalling Problem: Why Their Approach Is Financially And Reputationally Foolish

Capital markets are built on signals. Everything a sponsor writes or refuses to write sends a message about their seriousness. Sponsors who put demands ahead of facts signal that they value their time but not anyone else’s. Sponsors who want unlimited capital while risking nothing of their own signal that they see other people’s balance sheets as disposable.

That is commercially foolish for two simple reasons. First, lenders price and structure risk. If a sponsor refuses any economic contribution, there is no price that makes that acceptable. Second, reputations move quickly among real capital providers. Names attached to aggressive emails with “no equity, no fees, 100 percent financing, or you are scammers” do not disappear. They are remembered, forwarded, and quietly excluded from serious conversations.

Many of these individuals believe that loud confidence can substitute for substance. It does the opposite. Excessive self promotion combined with no equity and no tolerance for normal terms tells every credit officer that if the deal goes wrong, the sponsor will be the first to walk away and the last to accept responsibility.

Why Attacking Advisors As “Scammers” Is A Strategic Mistake

When an advisor explains that a deal does not qualify, or that fees and equity are required, a rational sponsor can do one of two things. They can adjust their position, or they can walk away calmly. The sponsors we are describing choose a third route. They send messages in capital letters announcing:

“YOU ARE A SCAM ORGANIZATION. DO NOT CONTACT US AGAIN. WE WILL EXPOSE YOU.”

They seem to believe this is a clever tactic. In reality it only proves three things:

• They cannot distinguish between a firm that declines a non-viable proposal and an actual fraud.
• They are willing to use reckless language in writing, which is a serious red flag for any professional counterparty.
• They are comfortable attempting to damage reputations when they do not get the conditions they want.

That behaviour is not only unprofessional. It builds a written record that can be presented to other advisors and lenders as an example of why the same sponsor should be avoided. They damage their own future financing attempts to score a short emotional win in a single email thread.

How We Protect Our Platform And Our Name From This Behaviour

At Financely we have no interest in engaging in public arguments with sponsors who write this way. We have a duty to protect our clients, our lender relationships, and our own brand from being dragged into that level of conduct. So the response is controlled and systematic.

None of this is about silencing disagreement. Sponsors are free not to like our terms. They are not free to rewrite reality, describe ordinary commercial discipline as fraud, and then expect to be welcomed back when they change their mind.

How Serious Sponsors Build Credibility Instead Of Destroying It

By contrast, serious sponsors treat their own credibility as part of their capital. They recognise that every email, every term sheet negotiation, and every conversation with an advisor leaves an impression that will either help or hurt the next deal. They do not confuse firmness with aggression, and they do not confuse confidence with entitlement.

A credible sponsor:

• Presents clear documentation and accepts that this is the starting point, not an optional extra.
• Contributes meaningful equity and understands that risk sharing is non negotiable.
• Engages on fees like a professional, even if they decide the proposal is not right for them.
• Can end a discussion with a simple “thank you, we will not proceed” without emotional escalation.

The result is predictable. They may not close every deal, but they are invited back. Their name appears on lists of serious sponsors, not on warnings. Over time that difference is worth far more than any short-term attempt to bully an advisor into working without clear terms.

Financely acts as arranger and advisor through regulated partners. Where lending or securities activity requires registration, activity is carried out by or through appropriately licensed firms in the relevant jurisdictions. Nothing in this article is an offer to lend or an offer of securities, nor is it a commitment to provide financing. References to quotes and behaviours describe common patterns observed in the market and do not constitute legal findings about any specific individual or entity. All mandates remain subject to KYC, AML, sanctions screening, full credit approval by funding counterparties, and formally executed agreements.