Apex Building Group, a Harlem-based developer, is typical of many small firms in New York. When they were seeking to develop a 21,000-square-foot residential project in the Bronx, they faced a hurdle: Banks generally only finance about 70 percent of a project, and there are few predevelopment loans available in the less than $5 million range.
Without deep pockets, they were prepared to seek higher-cost terms — like hard-money loans from investors. But then they became aware of the Emerging Developer Loan Fund (EDLF), which has been providing low-interest loans (4.5 percent, plus one-month LIBOR spread, compared to private finance loans as high as 15 percent) since 2016 to minority-, women-owned, and disadvantaged firms for projects valued at $30 million or less.
“Had we not obtained the EDLF funding, we would have been forced to seek out another lender or renegotiate less favorable terms with the seller to get to construction closing,” said JaVanna James, VP of development at Apex, which received a loan for $1.02 million, and contributed to 28 percent of the acquisition with equity. (EDLF requires equity contribution of at least 20 percent).
The fund, a partnership between New York City Economic Development Corporation (NYCEDC) and Basis Management Group, also provides assistance to help developers craft loan packages, and mentors project managers so buildings are completed on time — and on budget.
“Basis was very helpful in guiding us through the underwriting process,” said James. “They also provided advice in negotiating terms with the seller.”
For more information on the EDLF, visit the website.