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HOW TO WRITE AN EXECUTIVE SUMMARY FOR LENDERS
Your financial summary should include the acquisition costs, income, expense, cash flow, and financial
indicators. The borrower's down payment or equity should be clear. Indicate current and stabilized
NOI, occupancy rates, and optimal IRR, debt coverage ratio, and capitalization rate. Briefly describe
projected 3-5 year profit of funds are given to you.
Personal Financial Statement
Strength of the borrower is one of the main deciding factors in every deal. Some investors believe they
can hide behind the corporate veil or use an LLC as the purchasing entity. Most loans are recourse
loans and the lender will ask for a PFS and borrowers Net Worth for anyone with 20% or more
ownership. A majority ownership in a business is defined by 70-80% ownership. Along with the PFS the
lender will ask for three years' tax returns. This does not need to be included in the ES, but should be
mentioned in the cover letter.
Understanding economics is necessary when determining the market demand and why the market is
stable or improving or why this is a great time for the lender to be involved in your business. Secondary
market research from a credible source goes a long way. Include rents and occupancy rates in the
surrounding area for similar property types and class or other competitive businesses in similar trade
and their success. It's your story, so be unique and creative, but brief.
Integrity Of The Borrower
One of the biggest challenges in the lending business is extracting information from Executive
Summaries and gathering information to present to our lending groups. Loan requests and business
proposals should be prepared with the intent to answer most of the lenders critical questions quickly. A
lack of financial information or a reluctance to give information about the borrower raises a red flag to
Multiple exit strategies are a good thing. Your plan should briefly describe what improvements are
needed and their cost, how much money you expect to make and the time-frame. You should also
indicate your contingency plan if things go wrong and how to access the profits or future financing
The Executive Summary is a summary of the essential elements of your business plan and strategy.
Many summaries come across as propaganda or include information that does not pertain to the
property or business itself; instead, they contain mission statements, and photos of non-related
properties, are boring and not relative. Customizing the ES for a lender or investor, along with a well
written cover letter will result in consideration and respect as a professional investor.
This article will provide some tips to creating an Executive Summary (ES)
targeting lenders of commercial real estate and business loans.