Build a justified lender shortlist for a specific financing request.
A lender shortlist should be a set of testable financing paths. A familiar institution name, attractive headline rate or broad product description is insufficient evidence that a particular credit team can finance the property on the required terms and schedule. Start with hard constraints, then compare the quality of the evidence behind each remaining path.
The OCC commercial real estate lending handbook discusses repayment analysis, borrower capacity and collateral in bank underwriting. It does not rank lenders or promise that an institution will accept a transaction. The selection method below is an original workflow for organizing transaction-specific answers rather than a directory of purported lender capabilities.
Separate a gate from a preference
A gate can make an otherwise attractive option unusable: a prohibited property use, required recourse the sponsor will not provide, insufficient proceeds, an ineligible ownership structure or a funding date outside the contractual deadline. A preference affects the ranking of otherwise workable choices: reporting burden, flexibility, relationship value or price.
Write each gate as a question with an owner and evidence requirement. “Does this team finance industrial property?” is too broad. “Will the identified credit team consider this 62%-occupied industrial acquisition with a three-year vacancy lease-up plan, $6 million requested gross debt and a day-75 closing?” is answerable. Preserve the assumptions sent with the question so the response cannot silently migrate to a different transaction.
Use confidence categories before numerical scores
Consider three entirely hypothetical lender conversations. None represents an actual institution, quote or current market term.
| Path | Net closing proceeds | Required sponsor support | Schedule evidence | Critical unresolved point |
|---|---|---|---|---|
| A | $5.7 million | Full repayment guarantee | Originator says 60 days | Credit has not reviewed vacancy |
| B | $5.4 million | Defined limited guarantees | Credit team reviewed package; report orders mapped | Environmental scope pending |
| C | $5.8 million | Limited guarantees proposed | Generic product sheet says fast closing | Funding source and approval authority unverified |
The borrower needs $5.5 million net and refuses a full repayment guarantee. A fails a support gate despite adequate proceeds. B has a $100,000 capital gap that may be solvable if documented sponsor cash is available. C remains unqualified until decision authority and vacancy acceptance are evidenced. A numerical average should not allow strong price or speed scores to erase a failed gate.
Tag evidence as marketing statement, transaction discussion, written preliminary credit response or conditional approval. These categories describe the evidence in hand; they do not make a conditional approval unconditional. Record the date, author, assumptions and unresolved conditions alongside the tag.
Compare the cost of making a path executable
Suppose B requires $100,000 more sponsor cash than planned and an additional $25,000 report deposit. Of that deposit, $20,000 is credited against already-budgeted closing costs if the loan closes, while $5,000 is incremental. The additional eventual capital requirement is $105,000, not $125,000, although the sponsor may need to advance the full $125,000 before the credit arrives.
If C later becomes credible but requires a $60,000 nonrefundable diligence payment, the comparison must state which credit issues remain unresolved when the money is exposed. The lower payment is not automatically better; a better-documented path may justify more expenditure. Equally, a large deposit is not proof of funding certainty.
Do not invent approval probabilities to produce an expected-cost ranking. Where there is no defensible probability evidence, compare explicit scenarios: both close, B alone closes, C alone closes, neither closes, and a closing delay requires extra carry. State the sponsor’s cash loss and deadline consequence in each relevant scenario.
Build a scorecard that survives a personnel change
For each candidate retain the legal lender or funding vehicle, the contact’s role, who owns credit approval, who funds the closing, what has been reviewed, and what still requires consent. Record the proposed gross commitment and deductions separately from net closing cash. Identify whether the contemplated loan is retained, syndicated, assigned or dependent on another approval only when supported by the actual proposal.
Add a reason for inclusion and a reason for removal. “Removed because full repayment recourse is mandatory and unacceptable to sponsor” is useful. “Not competitive” loses the decision history and can cause the same unsuitable option to be approached again after a team change.
For a timeline-sensitive transaction, test the path with a milestone map: complete submission, preliminary credit, third-party scope approval, final credit, document negotiation and funding. Ask which activities can proceed in parallel and which depend on a preceding decision. Calendar estimates without dependency owners should remain assumptions.
The finished shortlist should contain a small number of explainable options, the evidence needed to keep each option alive, and a stop-spend condition for each. That gives the borrower a practical basis for selecting a path while preserving the fact that only the actual lender can determine its credit terms and approval.
Sources and evidence
- OCC — Commercial Real Estate LendingPrinted pages 42–43: Income-Generating Capacity; Debt-Service Coverage Ratio · Checked 2026-10-21 · Supervisory handbook for OCC-regulated banks; no universal borrower ratio or expense convention.
Source dates and applicability matter. Report an error or a changed source.