WHAT FAST CAPITAL REALLY COSTS

Title: What Fast Capital Really Costs — And Why Cheap Capital Is Often the Most Expensive
By: Don McClain, Founder & Principal, Fast Commercial Capital

Fast capital isn’t a rate. It’s an outcome.

In commercial finance and business funding, “fast” is often marketed as if speed is simply a matter of pricing. Borrowers get quoted a rate, compare options, and assume the lowest number wins.

In real transactions, speed is not a rate—it is an outcome produced by structure, certainty, and execution.

Sponsors and operators who have closed enough deals understand a practical truth: the cheapest capital is frequently the most expensive capital once you account for timeline risk, execution risk, retrades, and opportunity cost.

This article is a straightforward framework for understanding what fast capital truly costs—and how sophisticated sponsors evaluate whether a capital partner or advisor is worth retaining.

What “fast capital” actually means in real life

“Fast” can mean different things depending on the transaction:

• A bridge loan that must close in days to meet a payoff, release a lien, or prevent a maturity default

• A recapitalization that needs rapid underwriting clarity so a sponsor can finalize a purchase agreement

• A working capital solution that must align with cash conversion cycles and vendor obligations

• A refinance or acquisition capital stack that must hold together through third-party reports, legal, and closing logistics

Across these scenarios, “fast” only happens when three conditions are true:

1. The structure is financeable (and aligned with the asset, cash flows, and exit path)

2. The capital source can perform (real capacity, not theoretical)

3. The process is executed with discipline (documents, diligence, communication cadence, and decisioning)

When one of those breaks, you do not just lose time. You often lose leverage, terms, and sometimes the deal itself.

The real cost of capital has six components

The “price” of capital is rarely just interest rate. In practice, the total cost of capital includes:

1) Cost of money (rate)

This is the simplest part to compare—and the most misleading when evaluated alone.

2) Transaction costs (points, fees, legal, third-party)

Points, underwriting fees, legal, appraisal, environmental, insurance, lender counsel, and closing logistics all add up. Some are fixed, some scale with deal size, and some vary by lender posture.

3) Time cost (the hidden killer)

Time is not neutral. Delays can trigger:

• extension penalties

• rate lock expirations

• additional interest carry

• missed business opportunities

• seller fatigue or re-trading leverage

• maturity default risk

A “cheap” quote that fails to close on time can become the most expensive capital you ever pursued.

4) Certainty cost (probability-weighted outcome)

Sophisticated sponsors price capital by probability. A 6.75% term sheet with a 40% chance of closing is worse than a 9.75% solution that closes with high certainty when timing matters.

Certainty has measurable value because it preserves:

• the purchase contract

• the refinancing window

• operational continuity

• negotiating leverage

5) Structure cost (terms that impact your exit)

Structure is the difference between “capital” and “capital that works.” Key terms can create or destroy value:

• covenants

• cash management

• recourse and guarantees

• reserves

• extension options

• prepayment terms

• draw mechanics

• reporting requirements and operational constraints

Even with the same rate, two deals can have radically different outcomes based on structure alone.

6) Execution cost (advice, orchestration, and risk containment)

Execution is where many deals quietly fail. Execution includes:

• narrative and positioning

• lender/investor targeting

• diligence packaging

• negotiation and term control

• legal coordination

• timeline management

• communication cadence and stakeholder alignment

If execution is weak, you pay for it—either through delay, term erosion, or failed closing.

Why “cheap” capital is often the most expensive

“Cheap” capital typically becomes expensive through one of four failure modes:

Failure mode 1: The quote is real, but the timeline is not

A lender may be capable of attractive pricing, but not capable of operating at the speed required. In time-sensitive situations, speed is not a preference—it is a constraint.

Failure mode 2: The transaction is under-structured

A borrower may pursue low-cost capital without first ensuring the capital stack is viable. Under-structured transactions trigger:

• late diligence surprises

• revised terms

• reduced proceeds

• reserve requirements

• retrades and delays

Failure mode 3: The capital source is not truly aligned with the asset or borrower

Some lenders are excellent—within a narrow box. When the deal is outside that box, you lose time while the lender “tries” to make it work. The cost is almost always paid by the borrower.

Failure mode 4: The process lacks a disciplined quarterback

Even strong borrowers can fail at execution. When no one owns the process end-to-end, you get:

• incomplete diligence packages

• inconsistent narratives

• repeated underwriting requests

• slow responses

• timeline drift

Deals do not die with a dramatic rejection. They die with a thousand small delays that collapse momentum.

When a retained advisory model is rational (and when it isn’t)

There is an understandable skepticism in the market about retainers because many firms use them poorly. In institutional environments, retainers are common, but only when they serve a specific purpose: mandate clarity and execution accountability.

A retained advisory model tends to be rational when:

• the transaction is time-sensitive

• the structure is non-standard or complex

• the closing window is extended (e.g., 60–120+ days)

• there are multiple stakeholders (partners, attorneys, sellers, brokers)

• the borrower needs strategy, positioning, and orchestration—not just introductions

A retained model is usually not appropriate when:

• the request is small, simple, and fits a commodity product

• the borrower is not ready to engage (documents, responsiveness, decision-making)

• there is no clear path to closing

The test is simple: Is there real advisory work and execution responsibility required to create a closeable outcome? If yes, retaining the right advisor can reduce total cost—even if the retainer exists—because it reduces failure risk.

How sophisticated sponsors evaluate an advisor or capital partner

Sponsors who close deals at scale look for signals that reduce risk:

1) Process discipline

Do you have a defined intake, packaging standard, timeline, and cadence? Or is it reactive?

2) Capital source credibility

Do you have real, current relationships and capacity? Or are you “shopping” the deal broadly?

3) Narrative control

Can you frame the opportunity clearly with the right risk mitigants, or does underwriting discover the story late?

4) Term sensitivity and negotiation ability

Can you protect proceeds, extensions, and exit terms, or do you accept whatever comes back?

5) Communication cadence

Professional closing environments require consistent updates and documented next steps. Silence is not a strategy in transactions.

6) Alignment with the borrower’s real objective

If the borrower’s objective is certainty and speed, an advisor must act accordingly. The wrong capital pursuit wastes time and creates downstream cost.

A practical decision checklist for choosing “fast capital”

If you are evaluating capital options, use this checklist:

• What is the real deadline—and what happens if we miss it?

• What is the probability of close for each option (not just the pricing)?

• What terms create the biggest exit risk (extensions, reserves, covenants)?

• What documentation is required—and can we deliver it quickly?

• Who is quarterbacking diligence, legal, and timeline management?

• What is the opportunity cost of delay?

• Is the lowest quote actually achievable within our constraints?

If you cannot answer these clearly, your “cheap” option is likely not cheap.

About Fast Commercial Capital

Fast Commercial Capital is a nationwide commercial finance and capital advisory firm. We structure and execute financing solutions across business and commercial real estate transactions, with an advisory-first approach designed for time sensitivity, complexity, and certainty of close.

Don McClain is Founder & Principal of Fast Commercial Capital. The firm operates with office presence in Miami, Austin, and San Diego, and executes transactions nationwide.

If you have a time-sensitive financing event—maturity, acquisition, recapitalization, or a closing window that requires disciplined execution—you should prioritize certainty and structure as much as pricing.

Request an advisory call to determine whether your situation fits a retained execution model and what a realistic path to close looks like.