Florida HOA Loan Guide | A simple step-by-step manual for Florida board members looking for funding
1) Should your association borrow?
Good reasons
Required milestone/safety repairs (roof, concrete, waterproofing).
Reserve shortfalls—spreading costs over time is fairer than a big, sudden assessment.
Insurance shocks or large deductibles you need to pay now.
Owner impact—keeping monthly costs predictable to avoid hardship and delinquency.
Not-so-good reasons
Nice-to-have projects (landscaping, amenities) when finances are tight.
Covering routine operating shortfalls without a plan to fix the budget.
Moving ahead without a clear scope, bid, or total cost.
2) Prioritize your projects (urgent vs. optional)
Make two lists:
Urgent: Work tied to inspections, safety, or clear deadlines (e.g., milestone/SIRS items).
Optional: Upgrades that can wait (e.g., landscaping, cosmetic work).
Rule of thumb:
If money is tight, fund urgent only. If finances allow, fund urgent + selected optional while crews are mobilized.
3) Understand your financial health (four simple reports)
Delinquency / Aging Report: Shows how many owners are behind and by how many days. A lower number is better. Many banks prefer ≤10% of owners past due (60+ days).
Income Statement (P&L): Do current assessments cover expenses and required reserves?
Balance Sheet: Cash, reserves, and any debt/liabilities.
Annual Budget: Current year and a draft of next year—this is the baseline to see if loan payments fit.
Tip: If dues will rise, assume delinquency may rise a little too. Build that into your plan.
4) Get 3–5 bids for each project
Ask for on-site walk-throughs and the same scope for everyone.
Check licenses, insurance, references, and similar projects completed.
Compare what’s included/excluded, schedule, warranty, and not only price.
5) Build a forward-looking budget (two scenarios)
Example: 50-unit Florida condo
Urgent: Roof replacement
Optional: Landscaping upgrade
Loan terms for examples below: fully amortizing 5-year, 12% fixed.
ScenarioAmountApprox. Monthly PaymentPer-Unit (50 units)A: Urgent only (roof)$1,000,000$22,244.45$445B: Urgent + optional (roof + landscaping)$1,150,000$25,581.11$512
These are level monthly payments (principal + interest). Use them to see how dues or a special assessment would change.
Stress test: If you add ~$450–$500 per unit/month, how many owners might fall behind? Plan conservatively.
6) Choose the plan
If owner hardship is a concern, pick Scenario A (urgent only).
If the community can handle it, consider Scenario B, but keep a contingency and a communication plan.
7) Borrowing options
Traditional bank loan (typical guidelines—varies by bank)
Minimum loan size: often $250,000+
Delinquency: often ≤10% (60+ days)
Reserves/liquidity: often around 20% of annual budget
Size: many banks prefer 20–25+ units
Assessment burden: banks may flag very large increases relative to regular dues
Pros: lower headline rates, long amortizations.
Cons: slower timelines, tighter rules, less flexible if delinquency is high or documents are complex.
Private lender
Fast indications (often 24–48 hours).
Can work with higher delinquency, smaller loans, limited reserves, and special situations.
Structures can be customized (draw schedules, prepay options).
A practical path many boards use:
Use a private loan to fund urgent work and stabilize → refinance with a bank later if you fit their boxes.
8) What to ask every lender (and how to compare)
Ask for (in writing):
Timeline: days to term sheet, approval, and closing.
Rate & fees: interest rate range, origination, legal/third-party costs, any holdbacks.
Structure: term, amortization, any interest-only period, prepayment terms (when can we pay off early and what does it cost?).
Funding: one-time funding or progress draws tied to inspections? Who approves and how fast?
Copy-and-send email template
Subject: [Association Name] – Financing for [Project]
Hello [Lender Name],
We are a [50-unit] association in [City, FL] planning [roof replacement per inspection].
Estimated loan: $[1,000,000] | Target closing: [date]
Please share:
Timeline to term sheet/approval/closing
Rate range, fees, and any reserves/holdbacks
Term & amortization options; prepayment terms
Draw process and typical turnaround
Attached: last 2 years’ financials, YTD, budget, A/R aging, governing docs, engineer scope, 3 bids, draft board resolution.
Thank you,
[Officer/CAM Name]
[Phone] | [Email]
9) Prepayment, fees, and covenants—plain English
Prepayment: Try to get “no penalty after X months,” or a simple step-down (e.g., 3% year 1, 2% year 2, 1% year 3, then 0%).
Fees: Ask for a single page listing all costs—origination, legal, third-party reports, draw fees.
Covenants: Expect standard promises: keep insurance, provide financials, manage delinquencies, and use funds for the project.
10) Example: $1,000,000 loan for a 50-unit Florida condo (roof)
Terms: 5-year, 12% fixed, fully amortizing; prepay allowed after month 12.
Monthly payment: $22,244.45
Per unit: $445/month
Total interest over 5 years: $334,666.86 (if held to maturity)
Amortization snapshot
Month 1: Payment $22,244.45 → Interest $10,000.00 | Principal $12,244.45 | Balance $987,755.55
Month 12: Payment $22,244.45 → Interest $8,583.70 | Principal $13,660.75 | Balance $844,709.76
Month 60 (final): Payment $22,244.45 → Interest $220.24 | Principal $22,024.21 | Balance $0.00
If you refinance or prepay after month 12 (subject to your loan’s clause), your total interest paid drops.
11) Simple next steps (checklist)
List urgent vs. optional projects.
Gather financials (two years + YTD), budget, A/R aging, governing docs.
Get 3–5 bids per project with site visits.
Build Scenario A (urgent) and Scenario B (urgent + optional) budgets.
Ask 3 lenders for written terms (timeline, rate/fees, structure, draws, prepay).
Review with counsel/CPA; pass a board resolution; complete any required owner notices/votes.
Choose the best fit (bank if you qualify and have time; private if you need speed/flexibility).
Communicate clearly with owners (what, why, cost per unit, timeline).
12) A lender who understands Florida boards
If a bank is slow or your numbers don’t fit their boxes, Samtov Finance LLC can help with fast, flexible loans for HOAs/COAs—so you can handle urgent work now and refinance later if you choose.
Get a straightforward term sheet: https://www.samtov.com/loans
Quick glossary (plain language)
Principal: The amount you borrow.
Interest: The cost of borrowing.
Amortization: How the loan is paid down over time with equal monthly payments.
Delinquency: Owners who are behind on payments.
Prepayment penalty: A fee if you pay off early (try to limit or remove it).
Draw schedule: Funding in stages as work is completed.