The Items Needed in a Business Proposal for Financing

The Items Needed in a Business Proposal for Financing

To begin, there are 5 questions that all potential investors want answered before they will do a deal. Your entire presentation should center around answering these questions.

  1. How much money do you need?
  2. How much money will I make if I do this?
  3. When will I get my money?
  4. What are the risks involved?
  5. What if something goes wrong? Or more clearly, how do I protect myself if you screw this up?

The secret is to answer these questions quickly and not dwell on anything longer than necessary. For example, the longer you harp on how much money they will make, the less they may believe you. Hence, less is more! It’s not just what you say, but how you say it.

The best way to say anything is to show it as opposed to saying it. Let’s look at to following scientific study for proof:

Lenders are 100 times more likely to remember what they see than what you say!






The above chart is from Tor Norretranders’ book “The User Illusion: Cutting consciousness down to size.”

The point of the above study is simple. If people are paying attention to what you are saying, you have a 33% better chance of them remembering what you are saying if you make a visual presentation. If people are not paying attention to what you are saying, your chance of them remembering is 100 times better if you are making a visual presentation.

Since we have scientific documentation on the value of visual presentations, it makes sense to present our deal visually. The official term for this kind of presentation is a proposal. This is what will increase your chance of succeeding with your buyers and lenders. Hence, you should study what content a proposal should have. You will find a list of things like this:

Funding Proposals Should Include:

  1. Executive Summary
  2. Romance the Project
  3. Logic of Property Location
  4. Comparative Market Analysis
  5. Projected Profit
  6. Exit Strategies!
  7. About Your Company
  8. Financial Summary

There are 8 items on this list. Completing this proposal could take time. However, you may only need a one-page Executive Summary. Yes, only one page and it should answer all 5 questions that we began with above. You may never need to present anything else. Let’s look at how easy this can be:

Executive Summary

  1. Make a Summary
  2. Be Short and to the Point
  3. Include All Pertinent Information
  4. Make it only one Page!

The Executive Summary is just that, a SUMMARY that is short and to the point. All the pertinent information is included without all the details. Usually just one page with the highlights only. Remember, these are questions your investors and buyers want answered:

  1. How much money do you need from me, the lender, or from me, the buyer?
  2. How much profit for me, the buyer or the lender?
  3. How long does it take me, the lender or the buyer, to get my money?
  4. What are the risks I would take lending you the money?
  5. What if something goes wrong? What they think but don’t say is, “How do I, as the lender or buyer, protect myself if you screw this up?”

Next, let’s go over an example of how a “Real Estate Deal” can be presented so it answers the 5 questions on one page and looks good doing it:

Above is an actual deal where Jake got all the money he needed from John to do a deal. Just for the record, both Jake and John were students of mine. John was a former student at the time of this deal and Jake was a current student. Let’s look at how Jake was able to get John to invest the money based on the information above. Jake’s presentation answered all 5 of the critical questions and did it colorfully, using pictures and charts. See how this is achieved on the next page below:

Question 1: How much are we talking about?… is answered just below the subject property:

ARV = $215,500

Loan = $140,000

Will Pay 4 Points

15% Interest

6 Month Note

Jake is asking to borrow $140,000.00! Hence, he answers question one on the center of the page.

Question 2: How much do I make if I give you the money?

ARV = $215,500

Loan = $140,000

Will Pay 4 Points

15% Interest

6 Month Note

Again, just below center page, Jake answers question two, “How much do I make?” Jake is offering to pay $5,600.00 in points just to borrow the money and 15% thereafter on a 6-month note.

This was an actual deal. Jake didn’t have two nickels to rub together and call a dime. The $140,000 Jake borrowed was everything Jake needed to do the deal. Jake never even made a deposit.

Question 3: How soon do I get my money? Comfort for this question is offered in the top left-hand corner of the one-page Executive Summary.

36 Day Rehab

See Gantt Chart

Here, top left-hand corner, Jake documents skill in organizing and managing a rehab. Further, he specifically shows how and when the rehab will be complete in 36 days. Add to this Jake’s conservative estimate of the ARV for his property and lenders can get a good feel for how quickly they will get their money back.

Below is a simple example of a Gantt Chart. I don’t have a copy of Jake’s. Jake got his funding approved without having to show the Gantt Chart. How he did this will be shown in a recap of question 5.

The Gantt Chart presents what needs to be done and when. Hence, the painting is done before the carpet is installed. The tile is laid before the plumber comes to install the toilet. Gantt Charts can look pretty with a lot of color and graphics.

This specific example above is used to show how you would outline one of the scariest items that could come up in a rehab: a cracked foundation. Jake didn’t have this problem, but you might. Stay calm, let your lenders and buyers know you have your game under control.

Question 4: What are the risks? This question is answered ambiently with this “One-Page Executive Summary.”


First. It is easy to see that the comps being shown are the same style, size and in the same neighborhood. This is comforting to buyers, investors, and money lenders because the more similar the comps, the more believable the ARV (After Repair Value).

On just one-page, serious documentation is given to assure this as a “killer deal.” The home styles are similar, the size is the same and they are in the same neighborhood. Conservatively, Jake’s ARV shows his property value at $215,000 and he only asks to borrow $140,000.00. The two comps Jake shows are similar homes that sold quickly. The first sold at $222,500.00 in 45 days. The second sold for $236,000.00 in 61 days. Lenders and buyers center their decision to lend or buy based on “Comps.” The mathematics of these comps is comforting to lenders and buyers. The graphic presentation of the properties themselves and their numbers reduces the fear of risk.

Question 5: “What if you screw this up?” This question is almost never asked at all, much less in such a bombastic manner. Yet it is often the most important question to answer because, it is often the first thing the buyer or lender worries about. You will want to answer this question. Showing that a rehab will rent at a profit if it doesn’t sell is assuring to lenders and buyers alike.

A lot of what Jake showed offered comfortable proof. But, this Rental Exit Strategy is where John decided to do the deal. This property would easily rent for more than $1,400.00 a month. The One-Percent Rule indicates renting at 1% or more of the investment is likely to be profitable. Jake is only asking to borrow $140,000. A profitable rental may be the ultimate exit strategy.

John, the lender, knows if he does the whole deal and lends the $140,000 to Jake he will be able to take a first position lien against the property. Hence, if Jake screws up the deal, John owns a cash-cow rental property. John and Jake did the deal. Thirty-Eight (38) days later, Jake had $36,000.00 cash from the deal on zero investment. John made more than that. Jake has done dozens of deals since, some of them with John.

While Jake was able to get his deal financed in one visit over the phone with John, many interested lenders will ask for more information. The same rules apply. Continue to:

  1. Romance the Project…

Tons of deals get lost because the deal-maker gets sloppy in their presentation. Make everything look neat, organized, colorful, and exciting. You will do a lot more deals and make a lot more money.

  1. Logic of Property Location…

Jake was able to prove that all his comps were in the same neighborhood. But, property location can mean a lot more. If your property is a 20-minute walk to a University, close to a military base, near a hospital, or a shopping center, renting a property can be easy.

Have things been happening to improve the value of the neighborhood, like improved public transportation, shopping centers, parks, etc? Lenders and buyers can be impressed by these things. Don’t forget to make these things a visual part of your presentation.

  1. Comparative Market Analysis…

Notice how the numbers on the comps match the numbers on the map. Remember, your initial presentation should be one page. CMA’s and other details are to be presented once you have an interested buyer or lender.

  1. Projected Profit…

Don’t just scratch your numbers out on a piece of paper. Lay things out so it looks like you know what you are doing.

  1. Exit Strategies…

One of the most powerful exit strategies for a rehab flip is being able to rent it profitably. Because Jake is borrowing $140,000 and the rent rule says you should make money at $1,400 this looks very appealing to a lender. The importance of this exit strategy can’t be overstated. But, remember that a graphic and colorful presentation will seal the deal.

  1. About Your Company

This couple, like Jake, had never done a deal. However, they present their company elegantly. Good chance no one will ask for references. However, just use people who will speak well of you. Neighbors, friends or anyone else who will testify to your skills, likability, and honesty.

  1. Financial Summary…

Your Proposal can’t be too long. But, it can be too boring! Don’t be afraid to make your points graphically.

This is how to make winning proposals. But, don’t put a lot of time into the complete proposal until someone has shown interest from your One-Page Executive Summary.