The ideal commercial loan package for your lenderWilliam Pape, CMCverbal and written communication, person-to-person interaction, clients
After being in sales work for over 30 years, I can assure you
that it is very difficult to make a sale if you cannot meet with
the client. In the case of the commercial loan, you actually have
two clients—your borrower and the lender. That
person-to-person interaction is often critical to making the sale.
Even with most of us ordering products over the Internet, I believe
that the vast majority of us have concerns about purchasing a
complicated, high ticket item in that manner. You just feel better
if you can reach out and touch someone—or more specifically,
the person presenting a specific product to you. Bear in mind that
if you are just taking and placing an order, you are really not
involved in the sales process.
Even though you may have had verbal and written communication
with your lender, it is not the same thing as personal contact.
Every day, commercial Mortgage Brokers sell their products/lending
opportunities to potential lenders and often never meet them in
person. However, your loan package is representing you in the sales
process. The question is: Does it represent you well?
It is critical that your loan package be professionally designed
and presented so that your lending opportunity is well received by
the lender. We are all trying to do the best job we can with the
least amount of stress, and your lender is not an exception. When
the lender picks up your package to review it, you want to make his
job as stress-free as possible. You want to make the lender happy
that he has taken the time to look at your deal.
Let's consider the following suggestions for your loan
•Package the information in a binder of some type. I use a
three-ring binder because the lender can remove parts of the
package or add information or notes to the appropriate section of
the package. It just keeps everything in order. You may put a
personal letter in the outside transparent cover of the binder or
an eight-inch by 10-inch picture of the property.
•Divide the binder into logical sections with dividing tabs
separating the sections. If the lender wants to review specific
information or has asked you for additional information pertaining
to a specific portion of the package, it can be inserted as
desired. The binder may be two- to six-inches thick or you may use
multiple binders depending upon your needs.
•The three-ring binder may be divided into the
A. Executive loan summary, which would generally include a three-
to six-page summary of the transaction and your loan request, which
will allow the lender to get an overview of the transaction.
B. Information about the property:
1. Available Member Appraisal Institute or a full description of
2. Multiple pictures;
3. All available property reports (i.e., environmental,
4. Any specialized reports (i.e., Smith Travel Research
5. If appropriate, a zoning/flood/parking letter, certificate of
occupancy, insurance certificate, etc.;
6. A location map showing improvements in the area of our
property, an aerial map and legal description;
7. A property improvement plan, if any; and
8. Rent roll, including property specific details.
C. Information about the community in which the property is
1. Market/demographics of the community; and
2. Any available market study or feasibility analysis.
D. Information about the property/tenant(s):
1. A copy of the lease(s) with a lease roll-over analysis,
2. Any tenant financial information available and/or tenant
3. Detailed income and expense statements on the property for
multiple years and year-to-date.
E. Information on management with a resume and/or contract.
F. Information about the borrower:
1. The borrower's/entity's history and documentation;
2. Financial statements for multiple years and year-to-date;
3. Tax returns for multiple years, if appropriate.
G. Information about the guarantor(s):
1. Personal resume;
2. Personal financial statement(s), current within 90-days;
3. Signed and dated tax returns for multiple years, if
The "executive loan summary" should be detailed enough so that
the lender can make an initial decision as to whether or not the
property and financial transactions are as you have described them
verbally. You should send this summary to the lender prior to
sending him the loan package, and the lender should confirm his
initial reaction to the transactions that were based upon your
verbal description. The purpose of including the summary in the
actual loan package is so that it can summarize the contents of the
loan package once more.
The balance of the loan package simply supports the outline or
brief description of the information presented in the executive
loan summary. The order in which the information is presented
within the loan package should be coordinated with the manner in
which the information is presented within the executive loan
The proper presentation of the loan package is only one of the
steps in the loan process. One first makes contact with potential
lenders and has a verbal discussion. Second, if the lender shows
interest, one sends the potential lender an executive loan summary.
Third, one sends the selected lender a full loan package, and
finally, one works out the details and ultimately closes the loan.
As in any sales process, the closing of a commercial loan is a
series of events that must be coordinated and presented in the best
possible manner. When you make that first call to a potential
lender, the recipient of that call is evaluating you as much as the
potential transaction you discuss with him. Before you attempt to
complete a loan package and send it to someone, you should know to
whom you may be speaking, what you are going to say, give an
accurate description of the transaction and answer the questions
that will be asked. If you are not otherwise properly prepared,
your well done loan package will be of no value to you except as an
exercise. Finally, always be sure that the loan package represents
you well, if you expect to close the loan.
William Pape, CMC of Commercial Mortgage Brokers has 17
years of commercial loan experience, and works with life insurance
companies, conduits and other national lenders. He has held
national offices in the National
Association of Mortgage Brokers, directed six national
commercial conferences and was a designer for the two commercial
education courses offered by NAMB. He can be reached by phone at
(800) 326-5813 or e-mail [email protected]