WHEDA Small Business Financing Manual - Neighborhood Business Revitalization Guarantee Chapter

Criteria Defined, Developer as Borrower

Debt Service Coverage, Developer as Borrower

The ratio between effective gross income minus operating expenses over proforma debt service. Proforma debt service includes the principal and interest payments on all term debt.

Guideline:

The minimum projected debt service coverage is 1.15x after lease-up is achieved.

Loan To Value, Developer as Borrower

The ratio between the loan amount and the development's value

Guideline:

Lesser of 85% loan-to-appraised value or loan-to-cost.

Mission, Developer as Borrower

To develop or rehabilitate commercial real estate, including mixed-use properties, where a business occupies a portion of the building.

Guideline:

The Developer/Borrower must meet all eligibility requirements.

Equity, Developer as Borrower

The amount of cash or non-cash contribution made by the developer to the project.

Guideline:

The guideline is 15% overall; 10% cash.
Cash portion is cash or true grants.
Non-cash equity is readily established land equity value or deferred fees.

Occupancy, Developer as Borrower

The amount of space being leased by tenants.

Guideline:

Minimum of 50% of commercial space must be pre-leased.

Development Team, Developer as Borrower

The key individuals involved in the development of a project (i.e., owner/borrower, developer, general partner, contractor, architect, leasing agent and property management agent).

Guideline:

Developer has a minimum of two successful projects completed.

Market, Developer as Borrower

The demand for the location and type of project being developed.

Guideline:

Market demand for commercial space is demonstrated by a detailed written market analysis. Included are examples of demographics, competition, neighborhood characteristics and other relevant market factors.
Market demand for 8 or fewer residential units is demonstrated by a detailed written market analysis. Included are specifics of comparable properties, rents, vacancies and other relevant market factors.
Projects with 9 or more residential units will be required to submit a detailed market analysis completed by a third party.

Underwriting Guidelines For Developers

Criteria

Guideline

Debt Service Coverage

Minimum projected debt service coverage of 1.15x after lease-up is achieved

Loan-to-Value

Lesser of 85% loan-to-appraised value or loan-to-cost

Mission

The project meets the minimum eligibility requirements of the program

Equity

15% overall; 10% cash
Cash portion is true cash or true grants.
Non-cash equity is readily established land equity value or deferred fees.

Occupancy

Minimum of 50% of commercial space must be pre-leased

Development Team

Developer has a minimum of two successful projects completed

Market

Market demand for commercial space is demonstrated by examples of demographics, competition, neighborhood characteristics and other relevant market factors.
Market demand for residential units is demonstrated by specifics of comparable properties, rents, vacancies and other relevant market factors.


Underwriting Guidelines For Developers
Criteria	Guideline
Debt Service Coverage	Minimum projected debt service coverage of 1.15x after lease-up is achieved
Loan-to-Value	Lesser of 85% loan-to-appraised value or loan-to-cost
Mission	The project meets the minimum eligibility requirements of the program
Equity	15% overall; 10% cash Cash portion is true cash or true grants. Non-cash equity is readily established land equity value or deferred fees.
Occupancy	Minimum of 50% of commercial space must be pre-leased
Development Team	Developer has a minimum of two successful projects completed
Market	Market demand for commercial space is demonstrated by examples of demographics, competition, neighborhood characteristics and other relevant market factors. Market demand for residential units is demonstrated by specifics of comparable properties, rents, vacancies and other relevant market factors.