Acquisition Loan Term Sheet
Purpose: To fund acquisition loans to 501c Not-For-Profit organizations as determined by the IRS in New England (States of Connecticut, Rhode Island, Massachusetts, New Hampshire, Maine and Vermont) to enable them to advance affordable and / or supportive housing projects with the use of loan funds.
Maximum Loan Size: $1,000,000 per loan (maximum of one loan per not-for-profit organization). Loans must be used for the acquisition of a specific site for the development of affordable /supportive housing and loan proceeds to be advanced at the time of the closing on the Project site.
Term: All loans would be made for up to a term of two years renewable at the discretion of HMNE. Loan is to be repaid in full inclusive of accrued interest no later than the time of a construction closing with public and private funders.
Interest Rate: An interest rate based upon Prime Rate + .25% for new 1-year term will be charged by HMNE on all loans. Interest will accrue during the life of the loan and will be paid back at the time that repayment of the principal is made. An interest rate beyond the initial term will be based upon Prime Rate + .50% for extensions and adjusted every 6-months for the duration of the loan.
Potential Uses of Loan Funds: All applicable acquisition costs and other related acquisition fees deemed appropriate by HMNE. All expenses must be documented by the borrower and requisitioned to HMNE.
Eligible Borrowers: Not-For-Profits with a proven track record in the development of affordable and/or supportive housing. Organizations must have a strong balance sheet, experienced staff and a Board that is active in the field of affordable housing. The organization should also have: a successful track record in the receipt and use of public funds; three (3) years of strong audited financial statements; bank references; and, all current Projects owned and operated by the entity must be in compliance with all applicable government codes and regulations.
Due Diligence: HMNE will perform due diligence on both the Not-For-Profit entity and the proposed Project and the approval of a loan will be in HMNE’s sole discretion. Proposed Projects must be deemed feasible by HMNE in order to be approved. Feasibility will be determined based on the type of Project, status of site control, support from the community and local government, adequacy of market for proposed housing, design, zoning, availability of funding and other applicable considerations.
Fees: Borrower would be responsible for any direct costs that HMNE incurs to review the funding application and any required due diligence and servicing of the loan is the responsibility of the borrower. Payment in advance is required for the estimated fee for due diligence services provided by an outside consultant of HMNE’s choosing. This fee is non-refundable, if expended, regardless of approval or not of the loan requested. Any costs incurred by HMNE maybe incorporated into the principal amount of the loan. Borrower will be required to pay a 1% origination fee to HMNE (can be included in the loan) and will be required to provide HMNE with an executed contract of sale, an appraisal documenting the value of the property to be acquired, phase I environmental report completed within 6 months (phase II if recommended to be completed in the phase I report) and a title report showing clear title.
Loan Collateral: The collateral will be a first lien position recorded via a mortgage in favor of HMNE on the real property owned or to be acquired.
Application Process: The application form will appear by clicking below. It must then be downloaded to your machine by right clicking on the form and chosing a location on your computer with the save as button that will appear. With the latest Adobe Reader DC you will fill out the form on screen. You can then email it to us with one click. Please watch the short instruction video of the steps involved by clicking the green VIDEO button below. Applications that are received by the HMNE will first be reviewed for completeness and if deemed complete, HMNE will complete the review of the application and if the loan is approved, then HMNE will fund Project costs in an expeditious manner upon receipt of an acceptable requisition by the Borrower.
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