Tag Archives: commercial financing

Successful Executive Summaries

When is a commercial loan “summary” not a summary? When it turns into a book, of course. Or when it showed up as only a few sentences. So perhaps the better question to ask is: “How much information should you include in an Executive Summary?

The purpose of an Executive Summary is to present to the reader (presumably a lender or investor) the important FACTS of the transaction in support of the loan request. When you consider that a typical lender may receive 20 to 50 requests for financing PER DAY, you can see that both brevity and impact are important in crafting your request. Also remember that everything you put INTO the Summary needs to be supported by all of the documentation you collect from your borrower.

We start with an overall description of the transaction wherein the first sentence is a “summary of the Summary.” Do NOT forget to have a compelling picture on the first page. Pictures sell far more than to the dry facts. In the Transaction Summary, also remember to lay out the purpose of the financing, the borrower’s motivation, and how value is derived. Finally, include a “Use of Funds” statement.

The next section describes the sponsorship (humans) behind the transaction including net worth, liquidity, credit, and a short biography. The more experience your borrowers have, the easier it will be to obtain financing.

Now we split: Is this a refinance or a purchase? Each type of transaction has its key points, with actual “cash in the transaction” being the key component. Skin in the game is what lenders prize most so make sure that this is described in detail, particularly in cash out refinance transactions.

The next section covers any construction or rehabilitation to be done to the property as part of the loan request. Soft costs, hard costs, reserves (interest, hard costs, TI, and/or leasing) and closing costs should all be laid out… clearly.

Last, but not least of the descriptions, here you can include property facts such as building size, lot size, zoning, parcel numbers, etc. At the end of the summary, include MORE pictures of the property, a map, and maybe a satellite photo from Google. Brokers can get one of our summary templates by signing up: Click Here.

Next week I’ll discuss how to pick good lenders to add to your “list” so that you can service your clients more effectively.

Craig Higdon is the Chief Executive Officer of Dragon Realty Capital, a nationwide private money direct lender. More information can be found at www.DragonRealtyCapital.com. We also offer educational, interesting, FREE Reports for industry professionals and investors: Click Here to get yours.