Borrower Guide
Institutional-grade education for commercial real estate borrowers. Understand how lenders think, how deals get structured, and how to position your next financing for success.
Common Financing Mistakes
Avoid the pitfalls that cost borrowers time, capital, and deal certainty.
Shopping Your Deal to Too Many Lenders
Sending your deal to 15 lenders doesn't get you better terms — it signals desperation. Institutional lenders track submissions. A targeted approach through a single advisory relationship protects your credibility and gets stronger offers.
Focusing on Rate Over Structure
A 25-basis-point rate difference means nothing if your loan has a bad prepayment penalty, personal recourse, or restrictive covenants. Structure determines whether your deal actually works — not the rate on page one of the term sheet.
Submitting Incomplete Packages
Lenders form first impressions fast. An incomplete or disorganized loan package signals risk. Missing rent rolls, outdated financials, or unclear business plans cause immediate passes or unfavorable terms.
Underestimating Timeline
Commercial financing takes 45–90 days minimum for most transactions. Starting the process too late puts your purchase contract, rate lock, or business plan at risk. Begin capital sourcing before you need it.
How to Prepare for a Loan
What institutional lenders expect before they'll quote your deal.
Organize Your Financial Package
At minimum: trailing 12-month P&L, current rent roll or STR revenue reports, personal financial statement, entity documents, and a clear executive summary. Present it clean — PDF format, labeled clearly, no missing pages.
Know Your Numbers Cold
DSCR, NOI, cap rate, LTV, occupancy trends — you should know these before your lender asks. Borrowers who can speak fluently about their asset's financials get faster, better offers.
Clean Up Your Credit & Liquidity
Most institutional lenders require 680+ FICO and 6–12 months of post-close liquidity. Address any credit issues and verify your liquidity position well before submitting a loan request.
Have a Clear Business Plan
Whether it's a stabilized hold, value-add renovation, or ground-up development — articulate your plan. Lenders underwrite the story as much as the numbers. A vague plan gets a vague (or no) response.
Understanding Lender Requirements
What institutional lenders evaluate and why it matters for your deal.
DSCR & Leverage Explained
Debt Service Coverage Ratio (DSCR) measures whether your property's income covers debt payments. Most lenders require 1.20x–1.35x minimum. Leverage (LTV) typically ranges 55%–75% depending on asset class, market, and borrower strength.
How Lenders Underwrite Deals
Institutional underwriting evaluates: property cash flow stability, market fundamentals, borrower experience and net worth, business plan feasibility, and exit strategy. They stress-test your numbers against rate increases and occupancy drops.
Bridge vs. Permanent Financing
Bridge loans (12–36 months) are for transitional assets — renovations, lease-up, repositioning. Permanent loans (5–30 years) are for stabilized assets with consistent cash flow. Choosing the wrong product wastes time and money.
Why Loan Terms Matter More Than Rate
Interest-only periods, prepayment flexibility, reserve requirements, carve-out guarantees, and extension options directly impact your returns. A low rate with punitive structure can cost more than a higher rate with favorable terms.
Capital Stack Strategies
Sophisticated structuring insights for experienced borrowers and sponsors.
Optimizing Your Capital Stack
The right mix of senior debt, mezzanine, preferred equity, and common equity maximizes returns while managing risk. Over-leveraging kills deals in downturns; under-leveraging leaves returns on the table.
Refinancing Timing & Strategy
The best time to refinance is when your asset has achieved stabilization milestones — not when your loan matures. Proactive refinancing 6–12 months before maturity gives you leverage and options. Reactive refinancing costs you both.
Loan Structuring for Maximum Flexibility
Negotiate for: interest-only periods during stabilization, flexible prepayment after year 2–3, built-in extension options, and supplemental loan provisions. These terms compound returns more than rate ever will.
When to Use Mezzanine or Preferred Equity
When senior debt alone won't cover your capital needs, mezz debt (typically 70–85% LTC) or preferred equity fills the gap. Mezz is cheaper but adds lien complexity. Preferred equity is cleaner but more expensive. Each has strategic use cases.
Loan Readiness & Process
Checklists, timelines, and documents to prepare for a smooth closing.
Loan Readiness Checklist
Before submitting: ✓ Trailing 12 P&L ✓ Current rent roll ✓ Personal financial statement ✓ Entity docs (operating agreement, articles) ✓ Property photos ✓ Executive summary ✓ Prior appraisal (if available) ✓ Environmental reports (Phase I).
Documents Lenders Require
Standard institutional requirements include: 2–3 years of property financials, borrower tax returns, schedule of real estate owned, bank/brokerage statements, insurance certificates, and title/survey. Agency lenders (Fannie/Freddie) have additional requirements.
Timeline of a Financing Process
Week 1–2: Loan request & capital matching. Week 2–4: Term sheet negotiation. Week 4–6: Application, appraisal, environmental ordered. Week 6–10: Underwriting & committee approval. Week 10–12: Closing & funding. Expedited closings possible on bridge loans (3–4 weeks).
Understanding the Term Sheet
Key items to review: loan amount & LTV, interest rate (fixed vs floating), amortization schedule, prepayment terms, recourse vs non-recourse, reserve requirements, rate lock terms, and closing cost estimates. Never sign without advisory review.
Templates
Personal Financial Statement & SREO
Fill out, e-sign and download the two forms every lender asks for — right in your deal portal. Save a draft, upload your own, or skip for later.
Ready to Apply What You've Learned?
Submit your deal and let us match you with the right capital structure — no guesswork, no wasted time.