Condo Media - July 2013 - (Page 46)

by Wesley K. Blair III BANKING Looking for a Loan? What to Expect W ith summer upon us, some of us will head to the beach, some to the mountains, others to the golf course, and some will just drift to the backyard for a lazy afternoon. But some of us (read: condominium association trustees) will be walking around our properties, trying to figure out what needs repair and improvement and planning for fall activities. Small improvements are no problem. They can be paid for in the ordinary course of doing business. But what about addressing rotting siding or failing porches and decks? These types of repairs can run into the hundreds of thousands 46 Condo Media • July 2013 of dollars. Ever mindful of the strain that large special assessments can put on their fellow unit owners, more and more trustees are turning to banks to raise the funds necessary to cover these costs. Borrowing money and using the association’s cash flow to secure and repay the debt can be an easy and straightforward process if the trustees and/or the association’s managing agent know what they are doing and understand what documentation a banker needs to make a lending decision. In this article we will try to demystify the borrowing process a bit by explaining what documentation bankers ask for and why they ask for it. We will also review commitment letters, loan documents, and what to expect as follow-up documentation requirements after a loan has been funded. The Application Process The first piece of documentation we require is a completed application. It is usually a simple two- or three-page document that gives us a snapshot of the association and its loan request. It spells out the loan request, including the amount of the loan and what the funds will be used for. It also provides the bank with information regarding the association’s board of trustees and its management company, as well as other professionals whom trustees may rely on as they discharge their fiduciary responsibilities such as attorneys, accountants, and insurance agents. Having this information is helpful if questions arise as we complete the loan underwriting process. Although it sounds basic, it is imperative that the trustees of the association be in agreement to seek financing for their capital improvement project. If the bank is going to devote its resources to processing a loan for an association, it wants to know that the association is committed to borrowing the money for the project. In order to evidence the association’s commitment to the process, the bank asks

Table of Contents for the Digital Edition of Condo Media - July 2013

Condo Media - July 2013
From the CED’s Desk
President’s Message
CAI News
CAI Regional News
Asked & Answered
Homeowner’s Corner
Volunteer Spotlight
Vendor Spotlight
2013 CAI-NE Financial-Reserves Directory
Classified Service Directory
Advertisers Index

Condo Media - July 2013