Coming out of the Great Recession, many HOA communities realized that they had deferred maintenance which required urgent attention. Some projects that had been viewed as “nice to do’s” a few years ago had become “must do’s.”
Does your association have the reserves to pay for projects, such as:
If the answer is no, and you face a list of urgent projects, an association loan is an important option which enables your association to complete much-needed capital improvements without completely draining your reserves. An added benefit, it provides owners a more economical way to pay for their portion of the project over time.
Before pursuing a loan, your association will want to consider the following do’s and don’ts.
Other risk factors banks assess:
If your association does not fall within some of the above guidelines, it does not necessarily mean that you may not qualify for the loan. However, it may require additional loan structuring to mitigate the risk factors.
A bank loan can be a good option to protect your owners and association from decreased property values and more deferred maintenance, if you’re a well-informed board partnering with the right bank.
Senior Commercial Officer, SVP, CMCA CommunityPLUS, a division of North State Bank