Condominium Corp Financing : Reviewed & UnderstoodCondocorp Loan Financing

 

OVERVIEW – Information on condocorp loan financing in Canada. Condo term loans are desirable and effective when constructed properly with the right business financing advice.

 

Condocorp loan financing needs arise out of numerous situations that confront directors of the condo corp as well as the owners they represent. While it may well be that cash and reserves cover needed investment or repairs/upgrades it is also a case that borrowing via condo term loans must be considered. Let’s dig in.

There are numerous reasons , many of which we will cover for condominiums to seek special financing . That financing is of course the alternative to depleting the condo corp reserve, or.. heaven forbid, issue a special assessment to owners! In many case while many condominium owners and their mgmt might maintain a positive and healthy reserve the full depletion of that reserve is highly undesirable.

While good planning and cash flow forecasting and reserve analysis is the essence of any solid condo mgmt owner/mgmt team surprises often occur, as they do in any business.

Condo repair and upgrade financing is clearly a specialized form of financing, and in many cases the transaction certainly isn’t ‘ collateralized’ in the same manner as a typical business corporate entity might be. So it’s clear that for the condominium corporation to borrow effectively the expertise of a solid loan application is required. That ability to translate the condo corps payment ability into the real world of cash flow is critical.

In many cases Canadian chartered banks don’t really offer this type of financing, it’s highly specialized as we have noted. When you consider the facts the individual owners move and the board and condo mgmt company can also be in flux over the years the term ‘specialized finance ‘ makes tremendous sense.

What documents are critical to a solid borrowing plan from a lenders perspective? Key elements are a budget and cash flow forecast, historical and current financials, as well as specialized docs specific to a condominium such as a reserve study. That cash flow analysis is reviewed carefully as it would be with any other normal business operating entity.

While in theory (and law!) the condo corp can issue special assessments and ‘ liens’ on the property those actions are highly undesirable and not how the boards of condominiums like to operate. Boards that intend to borrow by the way require a solid bylaw be in place ensuring the board of directors has full authority to borrow.

Lenders will also want to ensure proper use and disbursement of funds vis a vis the reserve and operating expenses. Characteristics of a good condo corp. loan are that they are for proper repairs that are warranted in ‘ common element’ areas. Condominium repair loans are typically structured as term loans with fixed interest rates. Larger projects might be funded in stages, via ‘ progress payments’.

Careful care should be taken by the board (as well as the lender!) to ensure cash outflows match the useful life or repair of the asset or improvement.

If you’re looking for experienced condominium corporation financing for repairs and improvements that bring financial flexibility and health to your condominium corporation seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with condo term loans that make sense.


Stan Prokop
– founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – Completed in excess of 100 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info & Contact Details :
http://www.7parkavenuefinancial.com

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 905 302 4171

Office = 905 829 2653


greg@7parkavenuefinancial.com

‘ Canadian Business Financing with the intelligent use of experience ‘

ABOUT THE AUTHOR
Stan has had a successful career with some of the world’s largest and most successful corporations.
Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.

Stan has over 40 years of business and finance executive experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in depth, hands on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.

Stan Prokop

7 Park Avenue Financial
Canadian Business Financing