HOA Capital & Loan Assistance


8 Things to Know Before Working With an HOA Lender
HOA Capital

8 Things to Know Before Working With an HOA Lender

An HOA loan is funding borrowed from a lender that will be paid back with interest over time. You can utilize the financing for capital improvements or repairs to help restore the property or enhance the area's overall value.

There are some critical pieces of information to have before reaching out to a lender, so brush up on the things you should know here!

1. Where Are Your Financial Statements?

A standard requirement to gain a loan through a lender is to have at least the past three fiscal years of records.

The current year's financial information, delinquency report, and the operating budget may also need to be included in the paperwork required.

2. What Is Your Current Insurance?

Your association also may be required to show proof of current insurance.

Your insurance plan helps protect the HOA in situations where there may be medical bills, repairs, or lawsuits with coverage specified in common areas of the property.

3. How Will the Loan Be Paid?

You may need to provide a budget to show the different sources of income the property is providing, so the bank understands the options your association has planned to pay back the HOA loan.

There are multiple ways an HOA community can raise money aside from monthly dues, so whether you are renting out your clubhouse or planning on cutting costs, be sure to list these activities.

4. Does Your HOA Board Have Experience With Capital Planning or a Reserve Study?

Having a capital plan means there is an outline of the steps for projects needing completion  over a specific period.

Supplying this to the lender shows there is a guide in place to ensure that the financing provided is paid back on time.

5. Are There Any Delinquencies?

One of the other things you may have to provide is listing any delinquent homeowners with the properties.

This could be tenants in foreclosure, those behind on paying their monthly dues, or financial incidences, such as bankruptcies or financial mismanagement, that have taken place in your community.

6. What Upgrades Are Needed?

Whether you are choosing a capital improvement for your property or need financial support due to damages or breakdowns, you will need to have a specific outline of what improvements are required.

While some upgrades or repairs may be more obvious than others, if you plan an enhancement, doing a community assessment survey can be helpful. The survey can help you better understand what improvements your tenants desire, or feel need to be made to keep your community more desirable.

7. What Collateral or Security Is Required?

Depending on the loan amount and the intention of the financing, generally, an HOA loan may require some form of security or collateral.

Collateral ensures that the HOA can repay the loan, so be sure to have a plan with the details of what resources your association has available to help support the requested financing.

8. What’s the Size of the Property?

Typically, the lender will also need to know how many units the property has and how many are occupied by owners.

This is to ensure that there is a sufficient amount of monthly dues that are shared through the community to help decrease the impact of the monthly payment and successfully repay the loan.

HOA Capital: Streamlined Loan Options for Your Community

Don't let community upgrades cause you to worry! When it comes to HOA loans, you want to make sure that you work with a lender who strives to streamline a solution for their client's needs. HOA Capital wants to make your loan process as uncomplicated as possible by offering customized loans and HOA lending consultation.

We specialize in HOA management solutions and work hard to get you the funding you need to keep your property in the best condition possible, so contact us today or call us at 952-836-9593.

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