A credit memo template for commercial real estate.
The credit memo is the document a loan committee approves. Search for a template and you mostly find invoice credit notes. This one is the lending version: a fifteen-section outline for a commercial real estate loan, with what each section should cover.
A commercial real estate credit memo outline in fifteen sections, from the request summary to the risk rating, with what each section should cover. Use it as the skeleton for your committee write-up.
Downloads a CSV you can open in Excel or Google Sheets. Built in your browser; nothing is uploaded.
What a credit memo is, in lending
In commercial real estate lending, a credit memo is the underwriter's written case for a loan. It summarizes the request, the sponsor, the property, the market and the cash flow, tests the loan against credit policy, names the risks and how each is mitigated, and recommends approval or decline with a risk rating.
It is not the accounting credit memo, the note a seller issues to reduce what a customer owes. The two share a name and nothing else, which is why most search results for this term are invoice templates.
The fifteen sections
The template follows the order a committee reads: the decision first, then the support for it, then the exceptions and conditions.
| Section | What it covers |
|---|---|
| 1. Request summary | Borrower, sponsor, property, amount, purpose, recommendation |
| 2. Proposed terms | Rate, term, amortization, interest-only, fees, prepayment, recourse, reserves |
| 3. Sources and uses | Every dollar in and out at closing, equity shown separately |
| 4. Sponsor and guarantor | Experience, net worth, liquidity, contingent liabilities, background checks |
| 5. Property | Location, type, size, age, condition, occupancy, zoning |
| 6. Market | Submarket rents, vacancy, supply, comparable sales and leases |
| 7. Rent roll and tenancy | Top tenants, expirations, rollover, estoppel findings |
| 8. Underwritten cash flow | In-place and underwritten NOI, variance to sponsor |
| 9. Valuation | Appraised value, cap rate, review comments |
| 10. Loan metrics | LTV, LTC, DSCR, debt yield, break-even occupancy vs policy |
| 11. Third-party reports | Appraisal, Phase I, PCA, zoning, survey, title |
| 12. Risks and mitigants | Each material risk with its mitigant |
| 13. Policy exceptions | Every exception, with justification |
| 14. Conditions | Conditions precedent and post-closing requirements |
| 15. Risk rating and recommendation | Rating, approval authority, signatures |
What separates a strong memo from a long one
Committees read for the gap between the sponsor's story and the lender's numbers. The underwritten cash flow section should show both side by side, with vacancy, a management fee and reserves applied, so the variance is visible rather than buried. The loan metrics section then states each test against the policy limit, and the binding one is the one that sets proceeds.
The risks section works best as pairs: one risk, one mitigant, in a sentence each. A risk without a mitigant is a reason to decline or restructure. And every policy exception belongs in its own section, so the approving authority sees exactly what it is signing off on.
Using the template
Download the CSV and use the first two columns as the outline: section, then what it should cover. Write your analysis in the third column or move the outline into your institution's memo format. Sections can be shortened for small loans, but none should be skipped.
Run the numbers for section 10 with the DSCR calculator, the debt yield calculator and the NOI calculator. The guarantor figures for section 4 come from each personal financial statement.
Questions lenders ask
- What is a credit memo in commercial real estate lending?
- The underwriter's written analysis and recommendation for a loan. It covers the request, sponsor, property, market, cash flow, loan metrics, third-party reports, risks and mitigants, policy exceptions and conditions, and it is the document the loan committee approves.
- What should a credit memo include?
- At minimum: a request summary, proposed terms, sources and uses, sponsor and guarantor analysis, property and market review, rent roll and underwritten cash flow, valuation, loan metrics against policy, third-party report findings, risks and mitigants, policy exceptions, conditions and a risk rating.
- Is a lending credit memo the same as an accounting credit memo?
- No. An accounting credit memo is a note from a seller reducing what a customer owes on an invoice. A lending credit memo is a credit analysis and approval document. They share only the name.
- Who writes the credit memo?
- Usually the underwriter or credit analyst assigned to the deal, with input from the originator. It is reviewed by credit officers and approved by whoever holds the authority for that loan size, often a loan committee.
- How long is a commercial real estate credit memo?
- Length varies with the loan and the institution. Smaller loans may use a short form, larger or more complex loans a full narrative with exhibits. What matters is that every section is addressed and every exception is disclosed.
- Credit memo, definedThe definition and where it sits in approval.
- Loan committee, definedWho reads the memo.
- What underwriters actually needThe file behind the memo.
- Prodeal for underwritingWhere the memo sits in the credit process.
- Commercial real estate loan calculatorSizing by LTV, DSCR and debt yield.
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