Predevelopment funding for affordable projects plays a crucial role in realizing the vision for the projects covering the upfront costs incurred before a project can formally begin. Several types of funding sources are available to developers for predevelopment costs, which include architectural plans, legal fees, feasibility studies, environmental assessments and securing land. One of those funding options is offered by Enterprise Community Partners that offers predevelopment loans to support affordable housing developers, providing vital capital during the early stages of development. Below are the key details of their predevelopment loan program: 

Loan Terms 

  • Loan Amount: Typically, loan amounts can vary based on project size and needs, but they often range from $50,000 to $500,000 and up to $2 million. 
  • Interest Rates: The loans usually have below-market interest rates, though specific terms will vary depending on the project and location. 
  • Repayment Terms: Loan terms typically range from one to three years, depending on the project timeline and scope. Repayment is often expected once permanent financing or construction loans are secured. 
  • Collateral: Predevelopment loans are often unsecured, but some may require collateral or guarantees, especially for higher loan amounts. 

Application Process 

  • Initial Inquiry: Developers can start the process by contacting Enterprise’s local office or representatives to discuss the specific needs of the project. Here you can find all of Enterprise’s regional locations and contact details. 
  • Application: The application generally requires a detailed project description, development budget, proforma financials and an outline of the intended sources and uses of funds. Specific requirements may vary based on location and project type. 
  • Due Diligence: Enterprise typically conducts thorough due diligence, including reviewing the project’s viability, community impact and the developer’s capacity to execute. 
  • Approval Timeline: The review process can take weeks to months, depending on the complexity of the project. 

Deadlines 

  • Enterprise does not usually operate with fixed deadlines for its predevelopment loans. Applications are typically accepted on a rolling basis, allowing developers to apply whenever their project reaches the appropriate stage for predevelopment financing. However, this could vary by region, so checking with local Enterprise offices is recommended. 

Eligible Developers 

  • Nonprofit Developers: Nonprofit organizations focused on affordable housing or community development are eligible. 
  • For-Profit Developers: For-profit developers working on affordable housing projects, especially those with a track record of community development. 
  • Mission-Driven Developers: Developers who are committed to building affordable housing or who have a strong focus on equity and sustainability in underserved communities are particularly encouraged to apply. 

Eligible Projects 

  • Affordable Rental Housing: Projects focused on the development of affordable rental housing are the primary target for these loans. This includes new construction and rehabilitation projects. 
  • Mixed-Income or Mixed-Use Projects: Projects that include affordable housing components within a mixed-income or mixed-use development may also be eligible. 
  • Supportive Housing: Developments that incorporate supportive services, such as housing for seniors, individuals with disabilities or formerly homeless populations, are typically eligible. 
  • Green and Sustainable Projects: Enterprise encourages projects that prioritize sustainability, energy efficiency and green building practices. 

Enterprise’s predevelopment loans are designed to support projects that align with their mission to create affordable, equitable housing and uplift communities. Developers seeking predevelopment funds for their project can contact their local lender for further inquiries, and learn more here.