Borrowers
Construction and Rehabilitation Loans to Developers
Who can borrow from the Greater New Haven Community Loan Fund?
Eligible borrowers include:
• Nonprofit and for profit developers with the capacity to bring projects to fruition
• Limited equity cooperatives
• Community land trusts
• Partnerships
The Fund does not make development loans to individuals.
Borrowers must show soundness and reliability in their financial and cost analyses, and document competency in ongoing management and maintenance. Applicants must be in good standing within the community, financially stable, accountable and possess a positive track record with respect to housing or economic development.
What is an eligible project?
The Fund will provide loans for projects that meet the following criteria:
• At least 50% of the units must be affordable to low- and moderate-income households (households earning less than 80% of the regional median income adjusted for household size). Priority will be given to projects with the larger percentage of units affordable to low-income households (under 50% of regional median income) and for those which are affordable to the lowest incomes within the low-income range.
• At least two-thirds of the units will remain affordable to low and moderate income households for an extended period beyond initial occupancy. Priority will be given to projects which provide for the longest possible period of ensured lower income affordability.
• Projects must reflect a community benefit, long term economic viability, continued low income affordability, and compliance with community planning objectives. Preference will be given to projects which leverage other public/private funds.
What costs are eligible?
Loans from the Fund will be used for any reasonable and customary expense associated with an eligible housing project, including soft costs (architectural, legal, market studies, etc.), hard costs (land acquisition, site preparation, construction or rehabilitation).
Borrowers shall not use any monies for purposes not specified in the loan agreement, and may not assign their loan without written approval of the Board of the Fund.
What are the collateral requirements?
All loans shall be secured either by real estate or by other acceptable collateral. The Fund will take a secondary lien position where necessary to make possible other financing.
The loan to value ratio of any loan made by the Fund shall not exceed 100%. Standard debt to income ratios are evaluated on a case-by-case basis.
What are the interest rates, fees and repayment terms?
The interest rate, term and repayment schedule of loans made by the Fund are flexible and negotiated on a case-by-case basis and are consistent with market rates.
The Fund will set aside approximately 5% to 10% of the value of loans as a loan reserve. In the case of high-risk loans, the Fund may require a reserve of up to 20% of the value of the loan.
The Loan Fund shall seek to prevent default and foreclosure to the extent possible consistent with sound financial practices. No project will be found in default, and no action of foreclosure taken, without action by the full Board upon recommendation by the Loan Committee. Such actions shall be at the sole discretion of the board.
How does my organization apply?
Borrowers are required to submit a preliminary letter, describing the organization and the project, in order to enable the Fund to determine their eligibility. Preliminary letters should be addressed to Raquel Santiago-Martinez, Director of Lending.
Once determined eligible, borrowers may initiate a formal loan application, including:
• A narrative description of the history, membership, programs and activities of the organization; copies of budgets and funding sources; a statement of real estate holdings, if any; and a financial statement showing current assets and liabilities, a copy of the corporation’s certificate of incorporation and 501 (c) (3) letter, if applicable, as well as names and addresses of board members, and a copy of a board resolution authorizing the loan request.
• A detailed history of related activities, the specific purpose for which the loan is to be used, other financing sources, a statement of the need, and a complete project description.
What is the review process?
After the initial review, the Fund arranges for a site visit and meeting with the applicant. The Fund will establish a loan processing schedule and, where appropriate, initiate arrangements for the provision of technical assistance to the borrower.
Completed loan requests are submitted to the Loan Committee for review. The Committee will make recommendations to the Board of Directors to approve or reject the application.
Does the Greater New Haven Community Loan Fund provide technical assistance?
To the extent feasible, technical assistance and other support will be provided to all organizations. Where the Fund is not in a position to provide technical assistance to a particular organization, or in a particular area of expertise, the Fund will refer organizations to potential sources of assistance where they are available. The Fund may charge a reasonable fee for its technical assistance services.
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