ADC lending may finance land acquisition, land preparation, and construction of a project. ADC lending may finance a single- or multiple-phase development.
lenders or capital providers evaluate the projected cash flow of the project, and compare actual progress to the initial plan. This analysis will consider the feasibility of the project, given current market conditions, planned construction, and the level of debt. The bank’s analysis will also include a determination of the project’s feasibility. Feasibility describes the likelihood that the project as proposed will be economically successful.
The construction budget and pro forma may be two of the most critical elements in determining project feasibility. A detailed line-item budget will be carefully reviewed to determine if the budget is adequate. These are some, though not all, of the factors that will be considered in ADC lending.
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