I'm interested in hearing from the experts in this group on how to convince an SBA lender to return good-faith deposits after the lender decides to back out. This happened to a self-funded deal where I'm the primary minority investor. This is a non-bank lender active on Searchfunder. Here is what happened:

1. $2,500 deposit made after term sheet received
2. $5,000 deposit made after underwriting was complete but before closing activities started
3. Lender then finds an issue. We show the lender that the issue should not be a concern to them. Lender does some additional research and tells us that they are now comfortable with the issue.
4. Three weeks before closing, the lender brings up the same issue again. We ask the lender to make a final decision on this issue because we don't want to spend money on lawyers and sign the insurance paperwork unless this issue is resolved. Days later, the lender comes back and confirms in writing that the issue has been finally resolved.
5. We spend ~ $8,000 in legal fees and the searcher signs $40k in insurance contracts because the lender wants to see insurance paperwork before closing.
6. Approximately 1 week before closing the lender backs out of the deal citing the same issue they had twice before gotten comfortable with (including telling us this in writing)

We are now out thousands of dollars because we relied on the lender's (written) statements that the issue had been resolved before spending money on closing activities. We escalate this to the lender's senior manager and ask them to at least return the $7,500 in good faith deposits made. They offered a call, then subsequently ghosted us with no response to follow-up emails.

I would be interested in hearing from this group what customary practices are when a lender backs out of a deal very late in the process and it is basically their fault.