Pre-Development Loans
Predevelopment loans are short-term, usually the first dollars into a project, and often the most difficult type of financing to access because they cover expenses accrued even before construction begins.
Eligible Expenses
The following activities and associated costs are eligible predevelopment expenses, including but not limited to:
- Earnest money and purchase deposit
- Building inspection
- Site stabilization
- Interim maintenance
- Environmental surveys
- Appraisal and survey
- Property taxes
- Insurance coverage
- Professional fees including legal, accounting, architectural and consultants (i.e. environmental, finance, tax credit, development consultants)
- Finance-related fees (e.g. tax credit reservation fees; loan origination fees)
- Market/feasibility studies
- Project-related overhead (including administrative and staff costs)
- Site preparation/demolition
- Taxes
- Title and recording fees
Loan Terms
- Maximum loan amount: $100,000
- Maximum term of loan: Two-years
- Interest repayment: Monthly interest-only payments until maturity (typically but may vary depending on the project)
Loan Review
In addition to the normally requested information, the applicant will be required to submit the following supporting documentation:
- Financial pro-formas: (1) preconstruction sources and uses budget and (2) concept development budget; and (3) preliminary operating budget
- Preliminary letters of commitment from funders, if available
- Corporate or individual resumes of development team currently selected, including project manager, architect, attorney, consultants
- Letters of community/neighborhood/local government support
- Project timeline, including at the minimum the following milestones: full financing; zoning approval (if applicable); construction start; construction completion; rent-up or sales started/completed
- Description of the needs met by the project
- Description of the beneficiaries and benefits of the project
- Photographs of site/building
Learn more about other loan products available:
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PROJECT EXAMPLES
