Capital Strategy
The Project Changed. The Loan Did Not.
How delays, cost changes and leasing assumptions can place pressure on a financing structure that no longer matches the project.
By EZ Commercial Capital
A financing plan is built around assumptions
Loan amount, term, payments and exit strategy are based upon the information available when the transaction is structured. If construction costs rise, occupancy takes longer or the intended sale is delayed, the original loan may no longer support the revised plan.
Recognizing that change early creates more room to evaluate extensions, additional equity, refinancing or another appropriate response.
Review the structure when the facts change
Borrowers should compare current costs, remaining work, available cash and revised timing with the original capital plan. Waiting until maturity or a cash shortage limits the available choices.
Financing should continue to serve the project. When it does not, the structure deserves a fresh review.