Explain the payment problem, the requested change and how the revised plan can repay the obligation. Support the proposal with current property, borrower and guarantor information and show what happens if milestones are missed.
A workout package should explain why the current obligation is difficult to meet and why the proposed change improves the path to repayment. Asking for more time without funding the intervening period leaves the central problem unresolved.
The 2023 interagency policy statement describes prudent accommodations and workout analysis, including updated financial information and realistic repayment sources. It provides supervisory principles; it does not require a lender to grant an extension, waive a default or accept a particular recovery.
State the request and the current obligation separately
Identify the amount owed, current maturity, payment status and the specific change requested. Preserve the existing obligation in the analysis until a valid modification is effective. Counsel should address notices, rights, proposed documents and the consequences of any missed obligation.
Describe the cause using evidence: collections, tenant events, construction progress, costs, rates or other actual facts. Distinguish a temporary timing problem from a business plan that no longer supports repayment. Avoid describing every adverse result as a short delay without demonstrating the recovery mechanism.
Blank proposal and evidence index
section_id,required_analysis,current_position,support_ref,responsible_party,unresolved_issue,status
W001,Requested change,,,,,open
W002,Current financial condition,,,,,open
W003,Interim cash and support,,,,,open
W004,Repayment path,,,,,open
W005,Milestones and fallback,,,,,openField instructions
| Section | Support | Common error |
|---|---|---|
| Requested change | Precise terms sought and existing obligation | Writing the proposed date as though already agreed |
| Current condition | Updated property, borrower and guarantor records | Using old liquidity before competing calls |
| Interim support | Dated cash needs and accessible sources | Treating a guaranty as cash in the account |
| Repayment path | Net proceeds, timing and conditions of the exit | Using a future value without a funded path to it |
| Milestones/fallback | Observable progress and action if it fails | A fallback sale without costs or time |
Completed hypothetical package
section_id,required_analysis,current_position,support_ref,responsible_party,unresolved_issue,status
W001,Requested change,Hypothetical six-month extension; no consent assumed,PROPOSAL-v1,Sponsor and counsel,Terms and authority not agreed,proposed
W002,Current financial condition,Tenant departure reduced collections; updated property and global cash schedules attached by reference,OPS-v3;GLOBAL-v2,Controller,Collection timing and guarantor commitments need verification,evidence_pending
W003,Interim cash and support,"Six months at $15,000 burn plus $50,000 costs and $100,000 paydown = $240,000 need; $200,000 accessible support",CASH-v2;EQUITY-v1,Sponsor,"Unfunded $40,000 gap",open
W004,Repayment path,"Future refinance modeled separately; no commitment; proposed $200,000 total principal reduction takes $4.5m to $4.3m",EXIT-v2,Analyst,Remaining payoff and takeout conditions unresolved,proposed
W005,Milestones and fallback,Verify lease evidence and funding by specified negotiation dates; evaluate sale if unsupported,MILESTONES-v1,Sponsor,Fallback timing and net proceeds still require evidence,openThe proposed six-month period requires $90,000 operating support at $15,000 monthly burn, $50,000 costs and an initial $100,000 paydown. Total immediate and interim need is $240,000. With only $200,000 accessible support, the proposal has an unfunded $40,000 gap.
The exit row separately proposes $200,000 total principal reduction, taking a $4.5 million balance to $4.3 million. Only $100,000 of that paydown is included in the interim budget above. The remaining $100,000 needs its own dated source; it cannot be assumed to arise from the same already-allocated support. This intentionally unresolved example shows why the package must reconcile every phase.
A future refinance must also cover applicable interest, fees, reserves and costs. A $4.3 million principal target is not a complete payoff or proof that the lender will fund it.
Test whether the accommodation solves the cause
If new leasing drives repayment, identify signed terms, delivery costs, commencement conditions and the operating evidence a takeout lender may require. If sale drives repayment, model net proceeds and a feasible timetable. If sponsor support bridges the period, verify access and competing obligations.
An extension that adds costs without changing the supported exit may postpone the same gap. Show that scenario plainly. The lender and borrower need to evaluate the actual alternatives, including cases where no funded proposal is yet demonstrated.
Keep negotiations and performance records aligned
Track proposed terms, requested evidence, responses and executed changes with dates and versions. Update the model when payment, reserve, guaranty or reporting terms change. Do not infer that ongoing discussions suspend the existing agreement.
After an agreement, monitor its actual milestones and report material deviations through the required process. Preserve the supporting analysis so future decisions can distinguish a changed fact from an assumption that never became true.
Sources and evidence
- Interagency — Prudent CRE Loan Accommodations and WorkoutsSections III–IV, especially IV: Long-Term Loan Workout Arrangements · Checked 2026-10-21 · 2023 interagency supervisory statement, transmitted by Federal Reserve SR 23-5 dated June 30, 2023. It does not require approval of a particular borrower request.
Source dates and applicability matter. Report an error or a changed source.