Bank Financing Available for Homeowners Associations

Economic conditions over the last several years have left many HOAs short on capital needed for such items as necessary repairs, upgrades and improvements. With proper documentation HOAs can obtain bank financing for these items.

Loans to HOAs do not typically necessitate personal guarantees or liens on individual units. A bank will generally collateralize a loan to an HOA by taking an assignment of common area charges and assessments and/or a pledge of some amount of cash balances that may be maintained by the HOA. It may be necessary for the association to increase the amount of the monthly assessments that the homeowners are required to pay in order to support the loan payment.