10 Reasons to Get a Private HOA Loan

And Why Banks Will Refuse Your Condominium or HOA Loan

Many condominium and homeowners associations in Florida discover the hard way that traditional banks are not designed to handle real-world HOA challenges. When urgent repairs, insurance deadlines, or statutory compliance issues arise, rigid bank underwriting often leads to delays or outright denials.

Private HOA lending exists for exactly these situations. Below are ten common reasons banks refuse association loans, and why a private lender like Samtov Finance can step in with a bespoke financing solution.

1. High Owner Delinquency

The problem
Associations frequently experience delinquency rates above 10 percent of total assessments. In stressed communities, delinquency can exceed 15 or even 25 percent, particularly following special assessments or years of weak collections enforcement. This reduces monthly cash flow and makes budgeting unpredictable.

Why banks refuse
Most banks cap acceptable delinquency at 10 percent. Anything above that is often an automatic decline, regardless of lien rights granted under Florida Statutes 718 and 720 or whether the association is actively pursuing collections.

How a private lender can help
A private lender, like Samtov Finance, underwrites delinquency in context. They analyze collection policies, lien authority, legal enforcement status, historical recovery trends, and assessment-setting power. They don’t just say no, but they look at the bigger picture and create a dedicated payment plan for each community. This allows associations to access capital while delinquency is addressed over time.

2. Low Owner Occupancy

The problem
Many Florida associations operate below 85% owner occupancy. This happens when many of the units in the community are owned by investors who rent their units to tenants as a business. Coastal, seasonal, and investor-heavy communities commonly fall between 60 and 75 percent owner occupied units.

Why banks refuse
Banks impose rigid occupancy thresholds, often requiring 80 to 85 percent owner occupancy. Falling below these ratios typically results in denial due to perceived volatility. Many investors use funding, like mortgages, to fund their purchase of a unit. When rental prices go down, or high assessments are levied, their returns shrink. Protected by limited liability incorporation and possibly no personal recourse, these investors may choose to forgo their investment as it becomes less economical, abandoning their duty to repay they mortgage and assessments. Owner occupied units are perceived to be more stable as familied will feel more committed to protect their homes when their families live.

How a private lender can help
private lenders, like Samtov Finance, understands Florida market realities. They focus on budget stability, statutory lien enforceability, and cash flow reliability rather than arbitrary occupancy ratios. Private lenders may wish to look into the equity balances of each unit to determine their implicit collateral security and based on that analysis determine whether they can extend financing, rather than simply checking for owner occupancy.

3. Insurance Lapsed or Conditional

The problem
Associations may lose insurance or receive conditional coverage requiring roof replacement, electrical upgrades, or structural repairs within 30 to 180 days. This places the lender at risk as damage to the common property could mean cash flows would be prioritized for repairs rather than loan repayment.

Why banks refuse
Banks require full insurance in force at closing. If coverage is lapsed or conditional, funding stops regardless of repair plans or contractor bids. This leaves out many communities who struggle to fund needed repair to maintain full insurance coverage,

How a private lender can help
Private lenders like Samtov Finance regularly provide loans specifically to fund insurance-mandated repairs. Once reinstated, the perceived riskiness of the association decreases, allowing them to borrow additional moneys to fund special repairs.

4. Small Unit Count

The problem
Associations with fewer than 25 units often operate on relatively small annual budgets, which limits their ability to fund major repairs internally. With fewer units, revenue is also less diversified and concentrated among a small number of owners, increasing volatility and making budget stability more difficult to maintain.

Why banks refuse
Many banks impose minimum unit counts or loan sizes, commonly declining associations under 25 units due to their perceived riskiness.

How a private lender can help
Private lenders like Samtov Finance specialize in right-sized loans for small associations, structuring terms that match actual budget capacity rather than institutional minimums.

5. Insufficient Reserves

The problem
Many Florida associations often maintain reserve lower than 20% of annual operating budgets, and in some cases falling below 10% or becoming fully depleted due to deferred maintenance. Historically, associations were permitted under Florida law to waive or reduce reserve funding and defer certain capital repairs through owner or board approval, providing short-term budget relief but allowing maintenance needs to accumulate over time. As regulatory requirements have tightened, many associations now face significant repair obligations without adequate reserves, creating financial pressure and limiting their ability to fund repairs internally.

Why banks refuse
Banks view low reserves as a sign of financial weakness and future capital risk, leading to immediate rejection. They fear that low-to-no reserves communities fail to have an adequate buffer to meet unexpected repairs and may quickly fall behind in payments if given financing.

How a private lender can help
Private lenders like Samtov Finance recognize that reserve shortfalls are often the reason financing is needed. Their loans address immediate needs while supporting long-term reserve rebuilding. Often times the private lenders will lend to replenish the reserves a long with the structural repairs, and include a disciplined revenue collection to maintain ample reserve levels.

6. Pending Litigation

The problem
Associations may face active litigation involving construction defects, owner disputes, or vendor claims, with exposure ranging from thousands to millions of dollars.

Why banks refuse
Most banks maintain a zero-litigation policy and decline any association with active legal matters, regardless of merit or insurance coverage. Litigation can drain the association coffers and limit timely loan repayment.

How a private lender can help
Private lenders like Samtov Finance evaluates litigation case by case, reviewing insurance coverage, legal counsel opinions, and downside exposure rather than issuing blanket denials.

7. No Structural Integrity Reserve Study (SIRS)

The problem
Some associations do not yet have a completed SIRS or are operating with outdated studies, leaving future repair obligations unclear.

Why banks refuse
Banks require long-term capital planning clarity. Missing or incomplete SIRS documentation often results in denial.

How a private lender can help
Private lenders like Samtov Finance can lend while a SIRS is absent, using engineering reports, interim inspections, and phased repair plans to responsibly structure financing. They may bring their own engineers and assess potential future repairs.

8. Existing Debt or Liens

The problem
Associations may already carry loans, special assessment obligations, or municipal liens that complicate cash flow and lien priority. Being 2nd lien in HOA loans can be a risky position from the point of view of a lender.

Why banks refuse
Banks typically require a clean balance sheet and first-position clarity, declining loans when existing obligations are present.

How a private lender can help
Private lender like Samtov Finance specializes in refinancing, consolidating, or restructuring existing obligations to improve cash flow and operational stability.

9. No Professional Management

The problem
Many associations, particularly under 50 units, are self-managed and lack formal reporting or standardized financial processes. This may translate into lack of disciplined enforcement of by-laws, laxed revenue collection, and high board turnover.

Why banks refuse
Banks often require third-party professional management as a condition of approval.

How a private lender can help
Private lenders like Samtov Finance often work with self-managed associations. They communicate directly with boards, attorneys, and accountants and can close loans during or prior to management transitions.

10. Frequent Board Turnover

The problem
Some associations experience annual or mid-year board turnover due to burnout, disputes, or crisis conditions. Inability to set and implement long-term plans may result failing to budget for and address critical repairs when they are due.

Why banks refuse
Banks interpret frequent board changes as governance instability, increasing approval risk.

How a private lender can help
Private lenders such as Samtov Finance focus on statutory authority under Florida Statutes 718 and 720, properly executed board resolutions, and legal enforceability rather than board politics. They look beyond spreadsheets to assess whether the current board is committed to addressing the necessary changes.

Private HOA Financing Built for Florida Associations

Private HOA loans are a practical solution for associations operating in the real world. Samtov Finance provides fast, flexible, and customized financing solutions for Florida condominium and homeowners associations facing violations, insurance deadlines, statutory compliance requirements, or capital shortfalls.

Ready to Explore a Private HOA Loan?

If your association has been declined by a bank or cannot afford delays, Samtov Finance can help.

Contact Samtov Finance to discuss a bespoke HOA loan solution designed around your association’s real needs, not a bank’s checklist.