Direct Answer
The working principle
Underwriters distinguish cash needed to close from liquidity remaining afterward. They also consider ownership of the funds, accessibility, outside obligations, and capital already committed to other projects.
Separate equity from post-close reserves
Closing equity funds the initial capital stack. Post-close liquidity supports the plan after closing. Counting the same dollar in both categories overstates sponsor capacity.
- Show the cash required at closing.
- Show what remains after closing and closing costs.
- Identify restricted or borrowed funds.
Explain where the funds are held
Bank statements, brokerage statements, entity accounts, and partner funds may be treated differently. Ownership and access must be clear, especially when another person or entity supplies capital.
- Match account ownership to the borrowing structure.
- Document committed partner or guarantor funds.
- Explain large recent deposits when requested.
Account for the rest of the portfolio
A sponsor can appear liquid while the same funds are committed to several closings or active projects. A complete schedule clarifies contingent needs and available capacity.
- List near-term closings and capital calls.
- Identify guarantees on other debt.
- Estimate carry and remaining equity for active projects.
Working Checklist
What to put in the file
- Cash required for closing
- Post-close unrestricted liquidity
- Interest, tax, insurance, and operating reserves
- Construction or renovation contingency
- Capital committed to other projects
- Source, ownership, and accessibility of funds
These materials are general educational information, not legal, tax, investment, or lending advice. Submitting a request does not create a loan commitment. Terms are indicative until underwriting, diligence, documentation, and credit approval are complete.