Eight Steps to Prepare Your Next Construction Project for Underwriting
by Denita Schreier, CCIFP, CMA

Since the onset of the global pandemic, there has been much volatility in the construction industry, initially driven by the brief-but-steep pandemic-related downturn, then due to inflation, material availability challenges, and a construction workforce shortage. With construction costs still reeling at record highs, coupled with rising interest rates, it’s important to have a well-presented project to the financing partner. Construction underwriters are focused on reducing project risk, and it is critical to have all your proverbial ducks in a row before seeking underwriting.

You’ve probably heard the statement that “chance favors the prepared mind.” As a real estate owner, project developer, and constructor, we’ve learned a lot about the process and the information needed in advance. Don’t leave underwriting to chance. Here are eight critical steps to prepare your next construction project for underwriting.

  1. Develop a Pro Forma – The literal translation is “a matter of form” and in real estate terminology this is the critical document that looks at the financial projections based upon certain assumptions. And these assumptions must have a solid basis in fact. Pro Formas should be carefully developed, and the math must be perfect. An error in a Pro Forma alerts the bank that you lack attention to detail, negatively impacting your credibility. Check your math. Check your formulas. And then check again – involve multiple people in the review process to spot errors or identify general questions that need to be addressed.
  2. Tell a Story – This is all about the WHY. Why is there a need for this project? What is driving it? Define the need or the demand. Is it driven by a lack of a certain product or service in the marketplace? Or the need to expand to accommodate staff or production growth? Beyond the project, keep in mind that YOU are part of the story as well. What is the company or institution background? What is your special sauce or value proposition? What is your brand in the market? How are you different or better than the competition?
  3. Demonstrate Uniqueness – In addition the story, here you should delve into reputation. What do your customers or clients say about you? Do you have testimonials or quality scores to share? Do you have specialized patents or already offer a unique product to the marketplace? How does your corporate culture align with your offerings and workforce? A brilliant idea in a market with limited talent availability is not a recipe for success. Additionally, more of the same is not what underwriters are looking for, because that is a warning flag for increased risk.
  4. Utilize Strategic Thinking – Story and uniqueness help to establish project look, feel, and opportunity. But real data and analytics are also required to succeed. Part of that is demonstrating a true understanding of your internal strengths and weaknesses as well as the external opportunities and threats facing your operation. How will you leverage your strengths or minimize your weaknesses? How will you pursue market opportunities and deal with threats – known and unknown? A SWOT Analysis is an important tool to help underwriters better understand the situation and it demonstrates strategic thinking, which in turn allows the underwriters to be more comfortable with the project because it will be seen as less risky to them.
  5. Be Honest, Transparent, and Authentic – Don’t let your passion and excitement lead to hyperbole or overinflated assumptions when pursuing the underwriting. Banks want sound data backed by meaningful, realistic assumptions. You need to demonstrate complete credibility and “own” the content. Honesty on your end builds trust and credibility with the underwriters, which in turn allow them to be comfortable with the risk and assumptions.
  6. Share Equity Sources – What are all the funding mechanisms required to make the project a reality? What does the capital stack look like? Is it real or hypothetical? Again, underwriters are looking for sound opportunities that minimize project risk. “Show me the money” is not just a tacky movie line, it is also a critical component to getting your project successfully underwritten.
  7. Incorporate Visuals – In journalism, there is a phrase about burying the lede, which is when the most important part of an account is located deep into the story, and thus difficult to find. No one wants to read volumes of text to understand the project need, so incorporate a mix of charts, graphics, photos, infographics, and story narratives. Your presentation and documentation need to be interesting but also easy to understand. Don’t assume that you will be in-person with every decision-maker through the process, so be sure that any distributed materials (slide deck, handouts) include all pertinent information, presented in a visually-appealing manner.
  8. Proofread – It is not just the Pro Forma that needs a second or third pair of eyes. Everything should be proofread and edited, possibly multiple times. As they say, you only get one chance to make a good first impression. Don’t blow it. Pull in project partners and/or coworkers to review the content. Get an outside party to give you honest feedback – if they can’t follow your logic, or if they don’t understand your presentation, then a bank won’t either.

To successfully persuade a bank to underwrite your project, you need to demonstrate what is driving the project, showcase the opportunity, enhance your credibility, and establish transparency. When you are able to do these things, underwriters will be more comfortable with the perceived risk, and more likely to underwrite your project.


Do you have questions about this process or need assistance getting your project ready for underwriting? I’d love to hear from you! Reach out to me at dschreier@wdsconstruction.net.