Syndication Launch Newsletter #00108

How to Get a Bank to Say YES (Even in a Tight Credit Market)

Securing financing is one of the biggest hurdles for new and experienced syndicators alike—especially in today’s tightening credit market. With banks becoming more cautious, getting a lender to say “yes” to your commercial real estate deal requires strategy, preparation, and knowing exactly what lenders are looking for.

Understand What Banks Want

Before you walk into a bank, you need to think like a lender. Banks aren’t in the business of taking unnecessary risks. They want assurance that you and your deal are solid. Here’s what they evaluate:

1. Borrower’s Financial Strength 

2. Track Record & Experience 

3. Debt Service Coverage Ratio (DSCR) 

4. Property Viability 

5. Skin in the Game 

Steps to Improve Your Chances of Approval

1. Strengthen Your Financial Profile

• Increase Your Liquidity – Have reserves to cover potential vacancies, unexpected expenses, or market downturns.

• Partner with Stronger Guarantors – If your personal finances aren’t enough, teaming up with financially solid partners can help.

2. Present a Bank-Ready Deal Package

Your loan request should be presented like a business plan. A well-structured deal package can set you apart. Include:

• Executive Summary – A high-level overview of the deal.

• Property Financials – Rent rolls, historical income/expenses, projected cash flow, and market comps.

• Business Plan – How you plan to increase value, mitigate risks, and maximize returns.

• Sponsorship Team – Highlight your team’s experience, track record, and financial strength.

3. Build Strong Relationships with Lenders

• Work with Local & Regional Banks – They are often more flexible than national institutions.

• Meet Before You Need the Loan – Introduce yourself to lenders before you have a deal on the table. Relationships matter.

• Be Transparent – If there are potential risks in your deal, acknowledge them and show your plan to mitigate them.

4. Get Creative with Financing

If traditional lenders are hesitant, consider alternative financing options:

• Bridge Loans 

• Seller Financing 

• Private Lenders & Debt Funds

In syndication, financing is the fuel that drives your deals. Master the art of securing capital, and you’ll always have the power to grow your portfolio—even when banks are saying no to everyone else.

CRE Terminology of the Week

Tranche

In commercial real estate, the term tranche is frequently used, particularly in structured finance, debt, and securitization.

A tranche (French for "slice" or "portion") refers to a segment of a larger pool of financial assets, such as a loan, mortgage-backed security (MBS), or bond issuance. Each tranche represents a portion of the overall investment but comes with its own risk level, interest rate, and priority in repayment.

Why It Matters

Understanding tranches is crucial for syndicators as they navigate financing structures, risk assessments, and investment opportunities in CRE. Tranches allow for customized investment strategies and enable lenders and investors to allocate risk efficiently across different financial instruments.

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