Photo Credit: Olga Lopez
 
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Revolving Loan Fund (RLF)

Since 1983, commitments and loans from the McAuley's Revolving Loan Fund have assisted 135 housing projects in the US, contributing to the development of 2,500 affordable housing units. RLF loans range from $3,000 to $600,000; terms extend from three months to five years, with occasional longer terms when funds allow. Coupled with technical assistance, a loan from McAuley can make the difference between a successful project and one that stalls or remains unfinished.

McAuley maintains personal contact with all borrowers and offers a wide range of consulting services. RLF loans are underwritten according to prudent lending guidelines that are sensitive to local conditions. The Fund has an excellent repayment record. In addition, a Micro-Credit Housing Development Fund (MCHDF) is reserved for predevelopment and other financial needs that require extremely flexible terms. Loan recipients are required to report to McAuley quarterly on their progress.


Who can borrow from the RLF?

Photo Credit: Olga LopezFinancing is available to community-based organizations that serve people with incomes below 80 percent of the median income for their area. McAuley gives priority to organizations that serve low-income women and their families and that support local leadership through the active participation of local residents in the ownership, management or control of community-based housing. Such organizations are also eligible for a predevelopment loan from McAuley's Micro Credit Housing Development Fund as long as the organization is currently receiving technical assistance from McAuley Institute or has received technical assistance in the past.

Groups receiving RLF financing vary widely. Proyecto Azteca in South Texas helps poor farmworker families build their own homes. Aloysius Home in Memphis,Tennessee provides homes to people with AIDS. Manna, a seasoned non-profit developer in Washington, DC, has produced more than 500 homes for sale to low income Washingtonians. Manna built its first project with the help of a McAuley loan.

Click on the Project Locations map for more information on groups served by the RLF.

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Who are RLF depositors?

In addition to the Sisters of Mercy, who established McAuley Institute and its Revolving Loan Fund, 95 investors have deposited $10 million in the RLF. Investors include the Calvert Social Investment Fund, Adrian Dominican Sisters, Paulist Fathers, Partners for the Common Good Loan Fund, Presbyterian Church (USA) Foundation, Allied Irish Bank, and First National Bank of Maryland. A recent investment by the Community Development Financial Institutions fund adds an additional $800,000 to McAuley's Micro-Credit Housing Development Fund.

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How can our group qualify for a loan?

In reviewing loan applications, McAuley looks for organizations that demonstrate a commitment to affordable, accessible housing and to the long-term development of their communities.

To qualify for a loan your organization must also be one of the following:

  • a tax-exempt organization under Section 501 (c)(3) of the tax code
  • a limited equity cooperative
  • a limited equity partnership in which the general partner or member is a tax-exempt organization and materially participates in the planning, development, and operation of the project.

A loan origination fee (which can be amortized with the loan) equals 1.5 percent of the principal of the loan. During the loan evaluation period, all aspects of construction and operations will be subject to analysis by McAuley staff. An up-front payment of one-quarter of the loan origination fee is required prior to analysis of the loan. This fee helps to cover the cost of loan processing and demonstrate the commitment of the applicant.

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What is the first step?

Beginning the process is as simple as a phone call to McAuley at 301/588-8110. McAuley accepts loan applications year round. We can discuss your project idea with you and provide up-to-date information about the RLF application and Micro Credit Housing Development Fund application and approval process, Housing Development Loan Terms and MicroCredit Housing Development Fund Terms. You may also apply directly in writing, or you may fill out our information form so that we may contact you directly.

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RLF Application: Information Required

Cover Letter

In your cover letter, summarize the proposed project and describe:

  • Why loan funds are needed
  • Amount needed and length of term
  • When other funding will be in place
  • When RLF commitment and funds are needed
  • Proposed security
  • Appraisal or other valuation document

Project Description

  • Statement of need and market feasibility; description of neighborhood or area (include census track)
  • Development timetable
  • Documentation of site control
  • Schematic drawings and specifications
  • Energy conservation provisions
  • Environmental information
  • Site and neighborhood photographs
  • Community support/ input from potential beneficiaries

Development and Financial Information

  • Development proforma/source and use statement (itemized development cost projections that match funding sources with uses)
  • Housing and related development costs
  • Funding sources: Grant and loan amounts, rates, terms and supporting documents; Commitments, assurances or letters of intent from other funding sources

Operating Proforma

  • Proforma that projects operating budget for five years or the length of the loan, if more than five years
  • Outline of debt service for all loans
  • Computation of debt coverage ratio. (This ratio equals net operating income divided by total debt service. Net operating income is equal to gross income minus expenses excluding debt service.)

Description of sponsoring organization

  • Purpose, activities, past projects, track record
  • Qualifications of staff and consultants
  • Board member and officers, terms, selection process, and experience Other board characteristics. Is the low-income population represented?
  • By-Laws and Articles of Incorporation
  • Evidence of tax exempt status
  • Statement of commitment to reimburse McAuley Institute for legal and out-of-pocket expenses e.g., overnight mail, delivery, etc.
  • Latest audit and financial statements

Required Prior to Closing

Commitment

  • Pertinent real estate, service and program contracts
  • Evidence of site control
  • Title insurance and title report
  • Insurance: fire, hazard, and liability
  • Property survey
  • Board of directors resolution to accept loan with conditions outlined in commitment letter and authorization of signatures
  • Certificate of Good Standing

Legal Documents

  • Promissory Note
  • Security Instrument (Mortgage or Deed of Trust)
  • Endorsement of restrictions, easements, etc.
  • Evidence of recordation of security interest
  • Other contracts or documentation as necessary

For more information, see the Housing Development Loan Term Sheet below.

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TERM SHEET: HOUSING DEVELOPMENT LOANS

ELIGIBLE LOANS: PREDEVELOPMENT; ACQUISITION; CONSTRUCTION; SOFT COSTS; BRIDGE LOANS; LIMITED PERMANENT FINANCING
ELIGIBLE BORROWERS: NONPROFIT 501 (C)(3) ORGANIZATIONS; LIMITED EQUITY COOPERATIVES; LIMITED EQUITY PARTNERSHIPS USING LOW INCOME HOUSING TAX CREDITS WHERE A NONPROFIT IS MATERIALLY INVOLVED IN THE PARTNERSHIP
TYPES OF PROPERTIES: HOUSING WHICH WILL SERVE THOSE INDIVIDUALS/FAMILIES EARNING LESS THAN 80 PERCENT OF THE AREA MEDIAN INCOME
LENDING AREAS: NATIONWIDE
LOAN AMOUNT: CANNOT EXCEED 10 PERCENT OF AVAILABLE LOAN FUNDS TO ONE BORROWER
LOAN RATES: FIXED RATE AT 5.5%
LOAN TERMS: CAN RANGE FROM 90 DAYS TO 5 YEARS (LONGER IF FUNDING PERMITS)
SECURITY: LOANS MUST BE FULLY SECURED BY REAL ESTATE OR OTHER ACCEPTABLE COLLATERAL
LOAN TO VALUE: 80% OF THE PROPERTY VALUE. PERCENTAGE CALCULATION WILL INCLUDE ALL DEBT SHARED WITH MCAULEY AND/OR IN A PRIORITY POSITION TO MCAULEY
DEBT COVERAGE RATIO: MINIMUM OF 1.15:1.00
LOAN FEES: 1.5% OF PRINCIPAL LOAN AMOUNT. ONE QUARTER OF THE FEE IS DUE PRIOR TO LOAN ANALYSIS
CLOSING FEES: ALL CLOSING COSTS ASSOCIATED WITH THE PROJECT WILL BE PASSED ON TO THE BORROWER
REPAYMENT: THERE ARE NO PREPAYMENT PENALTIES. LOAN REPAYMENT SCHEDULES WILL BE DEVELOPED TO MEET BORROWER AND LENDER NEEDS
FUNDING ROUNDS: APPLICATIONS ACCEPTED YEAR ROUND
PRIORITY LENDING TO PROJECTS: THAT ARE LED BY OR BENEFIT WOMEN. THAT ARE RESIDENT CONTROLLED COMMUNITY-BASED GROUPS. GROUPS MEETING THE MINIMUM HUD QUALIFICATIONS FOR COMMUNITY HOUSING DEVELOPMENT ORGANIZATIONS. BORROWER HAS RECEIVED/IS RECEIVING TECHNICAL ASSISTANCE FROM MCAULEY.

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Micro-Credit Housing Development Fund Guidelines

The following information should be submitted with all applications for McAuley's Micro-Credit Housing Development Fund:

UNDERWRITING GUIDELINES:

Organizational (Applicable to all Borrowers)

  • An organization must have a designated project manager and demonstrate that it has the staffing capacity to manage the planned project;
  • An organization must have a functioning Board of Directors and all necessary incorporation papers such as Bylaws, Articles of Incorporation and a Certificate of Good Standing;
  • An organization's Board of Directors membership should be comprised of at least 33 percent low income community residents;
  • An organization's mission statement must include a long term commitment to affordable housing development;
  • An organization must provide a credit history of both the organization and the executive director (and/or project manager). In addition, at least three lending references will be provided and McAuley staff will contact all references;
  • An organization, if in its first year, must have raised or demonstrated the ability to raise 75 percent of its operating budget for its first fiscal year;
  • A site visit, by McAuley staff, will occur prior to loan approval for those groups that have no prior relationship with McAuley

Project Specific (Applicable to predevelopment; acquisition; and bridge loans)

  • A project must have a preliminary timeline as to acquisition, potential sources of funding, schedule for securing funds, beginning and completing construction, and potential permanent sources;
  • A project must have site control. Site control can be an option to purchase, a letter of intent, or a sales contract;
  • A project must have a list of potential sources of predevelopment funding in addition to McAuley's contribution

Cash Flow Loan

  • An organization must provide a detailed account as to what precipitated the cash flow deficit; how the funds will be used; and what will be the source of repayment
  • An organization must provide monthly cash flow statements for the last fiscal year and any interim statements compiled between last fiscal year and time of application.

For more information, see the Microcredit Housing Development Fund Term Sheet below.

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TERM SHEET: MICRO-CREDIT HOUSING DEVELOPMENT FUND

ELIGIBLE LOANS: PREDEVELOPMENT; ACQUISITION; BRIDGE LOANS; CASH FLOW LOANS
ELIGIBLE BORROWERS: NONPROFIT 501 (C)(3) ORGANIZATIONS BUILDING AFFORDABLE HOUSING; LIMITED EQUITY COOPERATIVES; PROJECTS SPONSORED BY SISTERS OF MERCY
TYPES OF PROPERTIES: HOUSING WHICH WILL SERVE THOSE INDIVIDUALS/FAMILIES EARNING LESS THAN 80 PERCENT OF THE AREA MEDIAN INCOME
LENDING AREAS: NATIONWIDE
LOAN AMOUNT: MINIMUM LOAN SIZE $1,000. MAXIMUM LOAN SIZE $100,000.
LOAN RATES: FIXED RATES 6.5%
LOAN TERMS: 18 MONTHS
SECURITY: LOANS EVIDENCED BY A PROMISSORY NOTE; NO OTHER COLLATERAL NEEDED
LOAN TO VALUE: NOT APPLICABLE
DEBT COVERAGE RATIO: NOT APPLICABLE
LOAN FEES: NONE CHARGED
CLOSING FEES: ALL CLOSING COSTS ASSOCIATED WITH THE PROJECT WILL BE PASSED ON TO THE BORROWER
INTEREST PAYMENTS: ACCRUED DURING LOAN TERM. PAYMENT DEFERRED UNTIL LOAN PAYOFF.
DISBURSEMENTS: USUALLY MADE IN STAGES AS REQUIRED BY DEVELOPMENT PROCESS.
REPAYMENT: THERE ARE NO PREPAYMENT PENALTIES. LOAN REPAYMENT SCHEDULES WILL BE DEVELOPED TO MEET BORROWER AND LENDER NEEDS
FUNDING ROUNDS: APPLICATIONS ARE ACCEPTED YEAR ROUND, OR , IF FUNDING PERMITS, AS REQUESTS FOR PROPOSALS
PRIORITY LENDING TO PROJECTS: THAT ARE LED BY OR BENEFIT WOMEN. THAT SERVE PEOPLE EARNING 60% OR LESS OF AREA MEDIAN INCOME. In which fifty percent or more of borrower's board is comprised of low income residents of the community who take an active leadership role. In which borrower has received/is receiving technical assistance from McAuley.

REVISED 11/30/98

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