Acquisition Loan Program
Purpose
The purpose of the Acquisition Loan Program is to fund acquisition loans for 501(c)(3) Not-For- Profit organizations, as determined by the IRS, for projects located primarily in the 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. While preference is given to projects in New England states, other regions will be considered.
Maximum Loan Amount
The maximum loan amount is $1,000,000.00 per loan (maximum of one loan per not-for-profit organization). Loans must be used for the specific site in the application for the development of affordable/supportive housing. Loan proceeds shall be advanced at the time of the loan closing on the Project site.
Term
All loans are for a term of up to three years and are renewable at the discretion of HMNE. Loans are 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
3-Year Term Sheet:
Year 1: Prime -1%
Year 2: Prime -.5%
Year 3: Prime
Following Maturity: Prime +.25%
Interest will accrue during the life of the loan and will be paid back at the time that repayment of
the principal is made.
Loan Collateral
The collateral will be a recorded first-lien-position mortgage in favor of HMNE on the real property owned or to be acquired.
Eligible Borrowers
The only eligible borrowers are Not-For-Profits with a proven track record in the development of affordable and/or supportive housing. Organizations must have a solid 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. Please see our Guidelines for Funding page for more information on eligibility requirements.
Fees
The borrower is responsible for any direct costs that HMNE incurs in reviewing the funding application as well as for any required due diligence and servicing of the loan. Payment in advance is required for any 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 of the loan requested. Any costs incurred by HMNE may be incorporated into the principal amount of the loan. The borrower may be required to pay a 1% origination fee to HMNE, which may 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 Project, a Phase I environmental report completed within 6 months and a Phase II report if recommended, and a title report showing clear title.
Due Diligence
HMNE will perform due diligence on both the Not-For-Profit entity and on 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.
Potential Uses of Loan Fund
The borrower is responsible for any direct costs that HMNE incurs in reviewing the funding application as well as for any required due diligence and servicing of the loan. Payment in advance is required for any 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 of the loan requested. Any costs incurred by HMNE may be incorporated into the principal amount of the loan. The borrower may be required to pay a 1% origination fee to HMNE, which may 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 Project, a Phase I environmental report completed within 6 months and a Phase II report if recommended, and a title report showing clear title.
Fees
Loan funds may be used for all applicable acquisition costs and professional expenses, such as engineering, architectural, and environmental review, as deemed appropriate by HMNE. All expenses must be documented by the borrower and requisitioned to HMNE.
Applications can be submitted through the link below.
If you have any questions about this loan program, please contact Leonard Gruenfeld via email at lg209@yahoo.com.