Commercial Loan Funds-Flow Statements: A Borrower’s Closing Guide

01

Distinguish the funds flow from the sources-and-uses schedule

A sources-and-uses schedule explains the economic structure of the transaction: where capital comes from and what it finances. The funds-flow statement converts that structure into closing instructions by naming the exact sender, recipient, amount, purpose, account, timing, condition, and approver for each transfer. Keep both schedules consistent, but do not assume one can replace the other. The executed loan, purchase, settlement, payoff, escrow, and account documents control when funds may move.

02

Define the transaction perimeter and closing roles

List every borrower, guarantor, seller, prior lender, title or escrow company, counsel, broker, government office, account bank, contractor, insurer, investor, and other recipient or funding party. Record exact legal names, roles, authorized contacts, and the document supporting each payment. Designate who prepares the schedule, who confirms amounts, who verifies payment instructions, who approves releases, and who has authority to authorize the final transfer.

• Requested amount and use of proceeds
• Historical and current financial statements
• Complete debt and ownership schedules
• Collateral and transaction documentation

03

Build one dated master schedule

Use one controlled version showing the anticipated closing date, funding date, value date, cutoff times, time zones, and version timestamp. Give each line a reference number and identify whether the amount is final, estimated, capped, held back, or subject to per-diem change. Maintain a change log instead of circulating competing spreadsheets. A late closing can change interest, taxes, insurance, prorations, recording charges, rate-lock costs, and required liquidity.

04

Reconcile every source before approving uses

Identify gross loan proceeds, net loan proceeds after withheld fees, borrower equity, deposits already paid, seller credits, investor contributions, subordinate debt, grants, tax-credit proceeds, escrow balances, and other approved sources. Confirm availability, ownership, restrictions, timing, and evidence for each source. Do not count the same deposit, reserve, credit, or cash balance twice. Reconcile the total sources to total uses to the cent and explain any deliberate buffer.

05

Map loan proceeds to funding conditions

Separate amounts funded at closing from delayed advances, construction draws, earnouts, holdbacks, reserves, and reimbursement items. Tie each line to the relevant commitment, loan agreement, closing checklist, invoice, certification, inspection, or other condition. Confirm whether fees are paid outside closing, deducted from proceeds, or financed. The borrower should understand the difference between the face amount of the loan and cash actually available on the funding date.

06

Control equity, deposits, credits, reserves, and escrows

Show who contributes required equity, when it must arrive, whether it must be invested before lender funds, and how prior deposits are credited. Identify the holder, permitted uses, release tests, replenishment duties, and accounting treatment for tax, insurance, debt-service, interest, repair, tenant-improvement, operating, and other reserves. A reserve is generally restricted cash or funded debt—not extra unrestricted liquidity—and its treatment must agree across the funds flow and governing documents.

07

Verify payoffs and release mechanics

Obtain current payoff statements for every debt or lien being satisfied and account for principal, accrued interest, per-diem interest, prepayment charges, legal or servicing fees, protective advances, release costs, and expiration dates. Tie each payoff to the affected collateral and required mortgage, UCC, control-agreement, or other release. Identify who confirms receipt, who authorizes release, who files or records it, and what evidence allows the new lender or title company to proceed.

08

Reconcile fees, taxes, prorations, and net proceeds

Match lender fees, legal bills, appraisal and third-party costs, title or escrow charges, recording and filing fees, transfer or mortgage taxes, broker fees, insurance, prepaid interest, purchase-price adjustments, rent and tax prorations, and other disbursements to current invoices or documented estimates. Identify items paid before closing and prevent duplicate payment. Calculate seller or borrower net proceeds only after all deductions, holds, credits, and required reserves are reflected.

09

Apply independent wire-fraud controls

Receive instructions through an approved authenticated channel and verify beneficiary name, bank, routing, account, reference, and transfer purpose using independently established contact information. Record the verifier, callback method, date, time, and result; require dual approval and appropriate dollar limits. Treat any change in instructions, beneficiary, urgency, or communication channel as a stop signal that requires full reverification. Email appearance, reply history, or a familiar signature block is not independent confirmation.

010

Approve, execute, and reconcile the closing record

Before release, obtain required borrower, lender, counsel, title or escrow, and other approvals on the same final version. Confirm available balances, transfer limits, cutoff times, funding conditions, recording authority, and contingency procedures. After closing, collect wire confirmations and receipts, reconcile the funds flow to bank activity, the closing statement, lender statement, and general ledger, investigate every variance, and preserve the approved schedule with supporting invoices, payoff evidence, release tracking, and change history. PFCS can help organize the financing package and closing checklist, while the lender and qualified legal, tax, accounting, title, escrow, cybersecurity, and other professionals determine authorized mechanics, compliance, approval, and final terms.