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» Developing an Exceutive Summary for a Commercial B
The initial approval process for a commercial loan is dependent on the photos of the property, the P&Ls, and the 'Executive Summary." The executive summary provides the 'story' behind your request. This important document must convince the lender that the loan is a good idea for you and for the lender.
Be clear and concise. Cover just the facts and edit the document carefully to make is as legible as possible. Here is what to include:
- Purchase price and date of purchase of the property
- Current appraised value or estimated value of the property
- Reason why are you seeking hard money or commercial bridge loan, rather than working with a conventional mortgage bank
- The timeframe in which you need the cash
- The amount you are requesting and the LTV (amount you request divided by the purchase price - or "value" if you have owned the property for more than a year)*
*NOTE: If you have owned a property for less than a year and have not put siginificant amounts of cash and improvements into the property, you will not be able to get a loan based on the "appraised value". You will get a 65% LTV loan based on the price you paid for the property. There are very few exceptions to this rule of thumb. One exception might be: you bought an empty commercial building and it is now completely rented and bringing in significant income. All you added to it was paint, office cubicles and a sign on the street. The income may make the difference between considering the purchase price vs the appraised value when determining the LTV for your loan.
