By Scott Jordan
An effective executive summary gives a brief, high-level overview of your business, the financing that you are seeking, and it should pique the interest of decision makers. It will either whet the appetites of lenders or cause them to hit the delete key. If well-written, your executive summary will be a concise pitch of your business venture, which can dramatically increase your chances for obtaining the financing you are seeking.
Whether you are seeking a loan or lease—for expansion, equipment, tenant improvements or to build-out a cultivation facility or store—the executive summary is the most important document in your business plan and loan package. While the length will vary based on your specific business and the history of your operation, the summary should ideally be limited to one or two pages. Cover any sales results, product introductions and innovations, consumer demand, and your year-to-date results, if applicable.
Keep in mind, lenders are looking for a company that can either repay a loan or make lease payments within seven to 30 days after the company receives funding. This is different than an equity investor, who has a longer time horizon to be repaid and is seeking a significantly higher return on capital.
When preparing your executive summary, here are the top 10 components to include:
- Business name and origin;
- Amount of funding you are seeking;
- How the money will be utilized;
- Timeline for funding;
- How the funding will be applied to make the business more profitable;
- Financial results to-date and pro formas;
- Guarantor information, including credit score, net worth, home ownership status, and income after the loan has been made; and
- Consumer demand data or purchase orders, if applicable.
Successful lenders see hundreds of business plans and so they want the important information highlighted quickly in order to consider a deal’s viability. If your summary is of initial interest, your business plan will likely be sent to someone else within the lender’s organization for further review. Rarely will the person you initially meet be the ultimate underwriter or decision maker, which means creating a succinct and thoughtful executive summary is critical to the success of your financing endeavors.