CAI-NJ Nov. 2019(w)

FINANCING... from page 28.

request, with the association’s plan on how to pay for them. WHAT TYPE OF LOAN A line of credit allows an association to borrow funds by utilizing a credit account, like a credit card. If a repair or replacement project takes a period of time and the contract requires prog- ress payments, a line of credit may be beneficial. The association will only pay interest monthly on those funds drawn. Normally these credit lines have a specific term and are automatically converted to a term loan at comple- tion of the project. A term loan is the credit facility that retires the amount borrowed over a specific time period. The term loan allows an association to make repairs and pay the money back over time. This can be much more attractive than an upfront special assessment, since the payments are spread over a multi-year period. III. Evaluating all the Factors Upon receipt of the loan package, the bank’s underwriting team will review the information provided for complete- ness and to be sure the data is current (no more than 30 days old). It is to the community’s advantage to present to the lender properly prepared, audited or reviewed financial statements. Based on the information provided, a thorough analysis of the bank’s credit risk to the particular request will be studied, to determine if the lending institution wants to extend a commit- ment to the association requesting to borrow funds.

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