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Taimour Zaman
Taimour Zaman

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Why 60% of Deals Die Before They Start (And How to Make Sure Yours Doesn't)

#startup #productivity

By Taimour Zaman, Founder, AltFunds Global

Originally published on AltFunds Global Blog

Most borrowers are unaware of this reality.

Most deals don't fail from weak businesses. The core issue: their story isn't verifiable.

At AltFunds Global, we see it every week. Strong operators. Real assets. Revenue on paper. But when a lender looks under the hood, something breaks.

Missing documents. Vague use of funds. No clear exit.

And just like that, the deal quietly dies.

60% of structured finance deal failures are due to documentation, not business fundamentals.

This isn't about intelligence or ambition. It's about preparation.

The real reasons deals fail

According to AltFunds Global's internal underwriting patterns, lenders aren't asking just one question. They are asking three, quietly:

  • Can I verify this?
  • Can I control risk?
  • Can I clearly get repaid?

If even one of those breaks, the deal slows down. If two break, pricing gets worse. If all three break, the deal is over before it starts.

The "Truth Pack" every lender expects

Every fundable deal depends on something simple. Not charisma. Not projections. Not a pitch deck. Documents. Clean, structured, and verifiable.

The Borrower Readiness Checklist calls this the Truth Pack, and it includes seven non-negotiables:

  1. 24 Months of Bank Statements - Lenders read line by line, not at a glance.
  2. Entity Organization Chart - If your structure is complex and unclear, perceived risk increases immediately.
  3. Use of Proceeds Memo - If you cannot explain exactly where the money goes, the deal stops here.
  4. Collateral Schedule - Every asset. Every lien. Every valuation. No assumptions.
  5. Exit Narrative - If the lender cannot clearly see how they get repaid, nothing else matters.
  6. Key Contracts - Revenue must be supported, not implied.
  7. Legal Entity Documents - Clean, current, and consistent across jurisdictions.

Why SBLC monetization fails more than it succeeds

Too many borrowers think having an SBLC is enough. It is not. Most failed SBLC deals do not meet lenders' verification standards.

Requirements include:

  • The issuing bank must be rated (minimum BBB-/Baa3)
  • It must be SWIFT authenticated (MT760)
  • It must follow ICC rules (ISP98 or UCP 600)
  • Complete bank-to-bank documentation chain with no breaks
  • The issuing bank must be able to confirm the SBLC directly
  • No upfront broker fees

The 3-point fundability test lenders actually use

Every serious lender is running the same internal test:

  1. Reality is Verifiable - Can you prove what you are saying?
  2. Cash or Collateral is Controllable - Does the lender have a legal mechanism to protect itself?
  3. Exit is Credible - Is there a clear and realistic path to repayment?

Scoring: 3/3 = Fundable | 2/3 = Possible but slower | 1/3 = Not a fit

How to know if you are actually ready

  • 7/7 documents and 0 red flags → Ready
  • 5-6 documents → Mostly ready
  • Fewer than 5 documents or multiple red flags → Not ready yet

Not being ready isn't failure. It's a timing issue.

Final thought

It is no longer about who has the best pitch. It is about who is the easiest to trust. Trust in capital markets comes from deal structure. Not words.

This article was originally published on AltFunds Global. AltFunds Global provides alternative finance advisory services, specializing in private credit and mezzanine financing for mid-market and growth-stage businesses. Visit altfundsglobal.com to learn more.

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