Loans are harder to get, but money, lenders are still available, banker says

February 21, 1993|By Amy L. Miller | Amy L. Miller,Staff Writer

Bank loans for building projects are now harder to obtain than they've been in the past two decades, a Carroll banker has told county developers.

But money and banks willing to lend it still exist, Louna Primm, vice president and commercial lending manager at Carroll County Bank and Trust, told members of the Carroll County Homebuilders Association at their monthly meeting Thursday.

"There still are lenders who would very much like to be involved in development and construction," Ms. Primm said.

Failed bank loans led government and banking officials to tighten banking regulations, she said.

Some of the new regulations require independent appraisals of property reviewed by the bank's board of directors and asking a series of questions about the project and the developer's experience.

Banks also are shifting away from financing developers' "soft costs" -- such as interest payments and payroll -- and from making loans based on collateral, rather than cash flow from a developer's other projects.

"People say, 'Oh, the bank likes liquidating things,' " Ms. Primm said.

"Trust me, I hate it. We don't want to sell property, we want the

cash flow and we want the project to be healthy."

She said developers should take the time to find a bank that will work with the project and its needs.

Developers also should make sure that the institution they work with is strong and will be around until the end of the project.

All loans from failed banks are turned over to the Resolution Trust Corp., the federal agency responsible for selling, leasing and managing a closed bank.

"The RTC took over one project that was running on time, paying all of its bills, and they closed the project down," Ms. Primm said.

"The developer said, 'Give me the money and I'll perform for you,' but the RTC didn't want to hear it.

"Luckily, he [the developer] was able to come to somebody that could extract the loan from the RTC. It was a nightmare for that developer."

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