The Homeowner Association Loan Arranger by Richard Thompson Community associations faced with large renovation projects that exceed available reserve funds often have difficulty obtaining financing for improvement projects even when they are well run and show strong historical cash flow. Not all projects can wait, like in the case of a bad roof or structural dryrot. The longer you wait, the more costly the repair.
Traditional banks are often reluctant to lend due to lack of collateral and repayment sources.
All is not lost. There are commercial lenders that understand the special needs of community associations. The trick is to find them and present your loan request properly. Typically, loans to homeowner associations are made for repairs and renovations to common area components. However, some lenders understand that using the proven assessment fee cash flow can be a reliable source of repayment and an acceptable risk.