The purpose of the BUILD Loan Program is to promote the production, preservation, and rehabilitation of housing for low and very low income households by making low interest short term loans available to eligible nonprofit organizations that help meet the housing needs of low and very low income households in Tennessee by engaging in eligible low income housing activities. The loans may be secured or unsecured depending on the proposed activity.

Eligible Participants:

To be eligible for participation in the BUILD Loan Program, the non-profit organization must:

1. Be organized under Tennessee law, as evidenced by Certificate of Existence
   from the Tennessee Secretary of State dated no more than 90 days prior to the date of application to the BUILD Loan Program.
2. Have an IRS designation under Section 501(C)(3) of the federal tax code.
3. Be dedicated to the purpose of creating affordable housing for low and very low income households. Household incomes must be at or below 80 % of area median income adjusted for family size.
4. Submit a viable plan for loan repayment.
5. Submit most recent financial audit, audited financial statement, or letter of financial review by CPA firm.
6. Submit documentation of Board approval for participation in the BUILD Loan
   Program.
7. Have errors and omissions insurance if requesting a 12 month or 18 month loan (this does not include 12 month start up loans).
8. The organization must be in good standing with all THDA programs.

Eligible Activities:

BUILD Loan Program funds must be used for operating and program expenses incurred to create affordable housing opportunities for low and very low income households. Eligible activities may include:

1. Development of single and multi-family units for homeownership or rental
2. Construction
3. Land Acquisition
4. Site Preparation
5. Pre-Development
6. Operating and program expenses such as for equipment, supplies, rent, or salaries

BUILD Loan Program funds may not be invested, loaned, or used to refinance or retire current debt.

BUILD Program Loan Options:

1. Start-up loan

• For organizations involved in the development of affordable housing for
  less than 2 years
• Up to $25,000 at 0% interest for 12 months, payment of principle due at
  end of term
• Progress reports submitted at 3 month intervals
• Only one Start-up loan per organization; multiple disbursements of funds
  may be made at THDA’s discretion

2. 6-Month Loan

• Up to $50,000 at 2% interest for 6 months
• Interest payments and progress reports due at 3 month intervals
• Payment of total outstanding balance due at end of term
• Other loan applications must be at least 3 months from receipt of 6 month loan
• An organization may not have more that $500,000 in outstanding BUILD loans at any one time
• Multiple disbursements of funds may be made at THDA’s discretion

3. 12-Month Loan

• Up to $100,000 at 3% interest for 12 months
• Interest payments and progress reports due at 6 month intervals
• Payment of total outstanding balance due at end of term
• Other loan applications must be at least 4 months from receipt of 12 month loan
• An organization may not have more than $500,000 in outstanding BUILD loans at any one time
• Multiple disbursements of funds may be made at THDA’s discretion

4. 18-month Loan

• Up to $300,000 at 4% interest for 18 months
• Interest payments and progress reports due at 6 month intervals
• Payment of total outstanding balance due at end of term
• Other loan applications must be at least 6 months from receipt of 18 month loan
• An organization may not have more than $500,000 in outstanding BUILD loans at any one time
• Multiple disbursements of funds may be made at THDA’s discretion

THDA reserves the right to give preference to organizations serving only families at or below 50% of area median income.

Multiple disbursements of all loan funds may be made at THDA’s discretion and may depend upon the receipt of satisfactory progress reports from the participating agency. THDA reserves the right to terminate the loan at any point if progress is not determined to be satisfactory.

Loan Security Requirements:

Loans for construction and land acquisition will require a lien to secure the loan.
Loans for site preparation, pre-development activities, and administrative costs will not require a lien, but will be limited to no more than 10 % of the organization’s overall operational budget. If the loan is to be secured, the organization will be required to provide a copy of the appraisal and of the deed to the property used to secure the loan.

THDA reserves the right to restrict the use of unsecured funds and to determine the amount of funds extended in relation to the project description. If the loan is to be secured, the organization may be required to provide documentation verifying compliance with local, state and federal regulations regarding the production of affordable housing.

Competitive Bids:

Nonprofit organizations participating in the BUILD Loan Program will be expected to take competitive bids for goods and services purchased with BUILD Loan funds and to describe their process for doing so.

Noncompliance:

Failure to comply with all terms of the BUILD Loan Program will make the organization ineligible to participate in any THDA programs from the incidence of non-compliance and for 1 year from the action taken which cures the non-compliance. In no instance shall the period of ineligibility last more than 36 months. THDA reserves the right to consider 30 day extensions on a case by case basis. Procedures established by THDA will be followed when determining an organizations’ ineligibility.

Required Documentation to be Submitted with Loan Application:

1. Most recent financial audit, audited financial statement, or letter of financial review by CPA firm
2. Copy of Certificate of Existence from Tennessee Secretary of State dated no more than 90 days prior to the date of application submission
3. Copy of 501(C)(3) designation letter from the IRS
4. Business plan or strategic management plan that demonstrates dedication and capacity to create affordable housing opportunities for low-income households; this document should include information describing income levels of population served
5. Documentation of operating funds from other sources, including how much annually and from what sources
6. Documentation describing plan for loan repayment
7. Project budget
8. Implementation plan that includes a listing of the major tasks in the activity and the expected time frame for completion
9. For construction and land acquisition loans, copy of appraisal of property to be used to secure the loan and copy of deed to the property.
10. Attorney’s opinion letter regarding other liens against the property, if any.
11. List of staff members employed by the organization, including how many are full-time, part-time, volunteers, their specific responsibilities related to housing programs and how many years of experience each staff member has in housing
12. Board minutes approving the organization’s participation in the BUILD Loan Program
13. Copy of proof of errors and omissions insurance for 12 and 18 month loans to include dates and limits of coverage (this does not include 12 month
    Start-up Loans)
14. Description of competitive bidding process

Application Evaluation:

Applications will be evaluated based on organizational status, mission, financial management and strength, organizational development capacity, project or activity eligibility and viability, and if applicable, compliance with federal, state, and/or local regulations.

Required Reports:

The non-profit agency must submit written progress reports to THDA at the prescribed intervals. The progress report should detail progress on activities outlined in the project narrative and information on the utilization of BUILD Loan funds. A project closeout report must be submitted to THDA within 30 days of the final payment of the loan. The closeout report shall discuss how the BUILD Loan Program has helped the non-profit organization create affordable housing opportunities for low-income households. The closeout report must also discuss the source of funds used to repay the BUILD Loan.

Reports are to be submitted at the following intervals:

1. Start-up loans, progress reports are due every 3 months
2. 6-month loans, progress reports are due every 3 months
3. 12-month loans, progress reports are due every 6 months
4. 18-month loans, progress reports are due every 6 months

Loan Closing Procedures:

Upon loan approval, the applicant will be required to enter into a loan agreement and sign a promissory note. If the loan is being secured by property, the applicant may be required to sign a deed of trust.

Applications may be mailed or faxed to:

Tennessee Housing Development Agency
BUILD Loan Program
404 James Robertson Pkwy.
Suite 1114
Nashville, TN 37243-0900
615-815-2200 (office)

Questions and/or comments should be directed to:

Toni Shaw
Community Projects Coordinator
615-815-2034 (office)
tshaw@thda.org (e-mail)

Updated 12/06/05