Although what to do when the loan goes out of balance is a tricky problem. Imagine the building is half done and the bank has begun disbursements from its loan. Suddenly, for whatever reason, the project is going to cost a million more to finish than expected. Once again, if the borrower is unwilling or unable to fund the excess costs the bank is likely to be obliged to. The bank's favorite kind of equity contribution is the non-deferred cash variety.
Cash is real, cash is easy to value, cash means the borrower really believes in the project.
Often, however, the borrower will contribute land equity to the deal. This is not a problem as long as the land was bought in the last year or so. Then the borrower and the bank will generally agree to value the land at costs. If the borrower has owned the land for years the bank and the borrower may have a disagreement about how much the land is worth, and therefore how much additional cash equity the borrower needs to put in. This argument can sometimes be solved by putting the question into the hands of an appraiser.