When your funding source isn’t available when it’s needed, it can grind a project to a halt, leaving developers and expectant residents waiting, often up to a year or more for payment. NeighborWorks Capital understands the nature of developing affordable homes, and is committed to helping developers stay on track and expand their development capabilities.
“It’s unusual to bridge development fees so that organizations can begin new projects,” said Chief Lending Officer Stephen Peelor. “Our short-term bridge loans help organizations with liquidity needed to complete their projects, so they can increase their pace of development, which leads to more affordable housing for families in the areas that need it most.”
Traditionally, these loans bridge timing gaps while organizations seek low-cost funds like grants or public agency loans, tax credit lending equity loans, or equity of pay-in investors. In many cases, NC does not require real estate security.
The type of funding sources NeighborWorks Capital will bridge can vary widely. Here are some recent examples:
- When Alabama’s leading nonprofit affordable housing developer, Community Action Program of North Alabama (CAPNA) secured LIHTCs for two projects, it turned to NC to bridge the gap created by predevelopment costs and state-required 15% deposits. NC provided working capital through a $800,000 enterprise loan.
- In East Boston, delays in receiving developer fees squeezed Neighborhood of Affordable Housing (NOAH)’s available cash, so they requested an $890,000 bridge loan to help provide liquidity and push predevelopment activities in their pipeline forward. NC’s loan is secured by a pledge of developer fees for Coppersmith Village and The PACO Properties, both of which are nearly complete and moving toward permanent financing.
- When long-time customer Nevada HAND, Inc. (NHI) needed funds for repayment during the tumult of the LIHTC market in early 2017, we made a $3 million bridge loan that allowed them to refinance loans from Citibank and NC for Sierra Pines Senior Living, a 90-apartment senior development in Las Vegas.
- We made an unsecured bridge loan of $375,000 to MPI Union Hill LLC to cover a portion of $550,000 in City of Worcester HOME funds committed from its 2020 allocation, $375,000 of which are not available late in the project’s development cycle.
“We will take on higher risk because we know our organizations and we’re betting on them. Our knowledge of the borrower and previous experience with them means we know their track record, and have confidence in their ability to deliver,” Peelor said.