Funding and covenants

Sample

Whether the money lasts to stabilization, and when each loan covenant is tested and whether it passes.

Sample deal, sample change orders and sample covenant terms. The sponsor's projection.

Sponsor commitment needed · base case: $657,742; From month 24Funded by lender-held sources through month 23 (Dec 2028); to stabilization, Jan 2030
Lender-held reserves · base case: Out May 2029; Month 28Sponsor commitment carries to the refinance, $312K left
Next covenant test · base case: Aug 2028; FailLoan in balance: requires sources cover uses, projected short $657,742
Cash needed to cure · base case: $657,742; 10 tests failBalancing deposit for Loan in balance, Aug 2028

Reserves and commitments left, month by month

Stacked at each month end to the refinance; anything unfunded sits below zero.

Interest reserve (lender-held)Lease-up and operating deficit reserve (lender-held)Sponsor deficit commitment (sponsor, not lender-held)Unfunded, cumulativeCovenant test

Interest reserve: runs out May 2029 (month 28)
Lease-up and operating deficit reserve: runs out Mar 2029 (month 26)
Sponsor deficit commitment: lasts through the refinance
Interest carry at the as-of: 12.5 months of next month's interest in the interest reserve

What if

Construction view, as of Jul 2028, month 18. The deal's current as-of is Jan 2031, month 48, on /loans.

Where these figures come from

Reading the sample model (loading the active deal).Not saved as a version: this deal has no saved model in this browser. The stress and covenant edits are kept in this browser.

Workbook cells read: 0 from the deal, 7 at the sample's figure

Input	Cell	Reads	Source
Rate cap on the loan	Inputs!C127	Yes (sample): the cap on record, months 43 to 54Read from the hedge records: the capped rate applies only in these months	Sample (cell not set by the deal)
Rate cap strike	Inputs!C128	4.50% (sample)Capped all in 7.25% in months 43 to 54	Sample (cell not set by the deal)
Construction loan spread	Inputs!C112	275 bps (sample)	Sample (cell not set by the deal)
DSCR at conversion, required	Inputs!C108	1.00x (sample)	Sample (cell not set by the deal)
Hard cost contingency	Budget!G48	1.19% of hard cost, $488,510 (sample)	Sample (cell not set by the deal)
Interest reserve budget	Budget!G125	$2,193,302 (sample)Blank cell: the workbook's loop sizes it; the sample's figure stands	Sample (cell not set by the deal)
Lease-up reserve budget	Budget!G126	$100,868 (sample)Blank cell: the workbook's loop sizes it; the sample's figure stands	Sample (cell not set by the deal)

Scenario cells, not read as the base case

Input	Cell	The deal holds	On this page
Market rent multiplier	Inputs!C24	No saved deal	A scenario cell (schema: scenarios). Not read as the base case here.
Operating expense multiplier	Inputs!C25	No saved deal	A scenario cell (schema: scenarios). Not read as the base case here.
Construction loan rate shift	Inputs!C28	No saved deal	A scenario cell (schema: scenarios). Not read as the base case here.
Delivery delay	Inputs!C27	No saved deal	A scenario cell (schema: scenarios). Not read as the base case here.

Funding stress, not the base case, kept in this browser: at the base case.

Covenant definitions not in the workbook yet, kept in this browser: none changed (every covenant definition other than the conversion DSCR level saves here).

What if: change orders, lease-up, rent, opex, rate, delay (at the base case)

Funding stress, not the base case

At the base case

Kept in this browser for this deal. A stress never changes the deal's base case, its versions or its workbook export.

Change orders added$0

Lease-up slower by0 months

Rent lower by0.0%

Operating expenses higher by0.0%

Rate higher by0 bps

Count the cap on record (7.25% all in, months 43 to 54)

Completion delayed by0 months

Underwritten rate 7.00%, the rate the projection draws interest at. Rate now 5.90% all in (Term SOFR 3.15% plus 275 bp, the loan record, Sample Regional Bank, index indicated on the term sheet). Capped 7.25% all in, months 43 to 54 only. No cap on record in months 19 to 42 and months 55 to 61: the rate floats there.

Sources, months and covenants

From Aug 2028 through stabilization, Jan 2030 (month 36).

Sources: available, used and left
Sources	Available	Used	Left
Lender-held: the loan and the reserves it funds
Construction loan, undrawn for costsCommitment less the drawn balance and the reserves the loan funds.	$9,614,352	$9,614,352	$0
Interest reserveThe budget's capitalized interest line, undrawn; pays interest only.	$1,639,945	$1,639,945	$0
Lease-up and operating deficit reserveThe budget's lease-up reserve line; pays interest or operating deficits.	$100,868	$100,868	$0
Lender-held sources	$11,355,165	$11,355,165	$0
Project: called equity and operating income
Equity left to callCommitted equity not yet contributed.	$0	$0	$0
Operating income applied to interestProjected; cash flow after interest is released, not held.	$1,124,350	$1,124,350	$0
Sponsor: an unsecured commitment, not a lender-held source
Sponsor deficit commitmentThe GP member loan the lease-up plan names (sample); drawn from the guarantor's cash.	$1,139,132	$657,742	$481,390
Total	$13,618,647	$13,137,258	$481,390

Remaining uses
Remaining uses	Amount
LandBudget $2,000,000, spent $2,000,000 by Jul 2028	$0
Hard costs (GMP)Budget $41,000,000, spent $32,864,063 by Jul 2028	$8,135,938
Hard cost contingencyBudget $488,510, spent $204,532 by Jul 2028	$283,978
Soft costsBudget $4,111,905, spent $3,427,248 by Jul 2028	$684,657
Developer feeBudget $2,040,000, spent $1,530,000 by Jul 2028	$510,000
Financing feesBudget $254,415, spent $254,415 by Jul 2028	$0
Change orders beyond the contingencyThe contingency left carries every change order.	$0
Interest to completionOn the drawn balance at the note rate.	$933,564
Interest after completionDebt service until the refinance retires the loan.	$2,364,157
Operating deficitsMonths early in lease-up when expenses exceed income.	$224,965
Extension feesOn the balance when each needed extension is exercised.	$0
Total uses	$13,137,258

Hard cost to finish at Jul 2028: $8,135,938. Contingency is read against it. Band (sample, until the loan agreement states a floor): 5.0% of cost to finish or more reads above the band, under 5.0% watch, under 2.5% below the floor.

Contingency and change orders, with contingency as a share of hard cost to finish
Contingency and change orders (sample)	Status	Amount	Of cost to finish
Contingency budget		$488,510
Spent by Jul 2028		-$204,532
Contingency left		$283,978	3.49%Watch
Podium waterproofing upgrade (sample)	Approved	-$96,000
Corridor fire dampers added by the fire marshal (sample)	Approved	-$41,500
Unsuitable soil export at the garage ramp (sample)	Pending	-$88,000
Amenity deck finish upgrade (owner) (sample)	Pending	-$36,500
Change orders added (stress)		$0
Contingency uncommitted		$21,978	0.27%Below the floor
Beyond the contingency: new cost		$0

Month by month from the as-of to the refinance
Month	Occupied	Costs to finish	Rate	Interest	NOI	Shortfall	Interest reserve left	Lease-up and operating deficit reserve left	Sponsor deficit commitment left	Loan balance	Events
Aug 2028Month 19, Construction		$1,807,926	7.00%no cap	$131,640		$131,640	$1,508,305	$100,868	$1,139,132	$24,506,401	Loan in balance: fail
Sep 2028Month 20, Construction		$1,600,141	7.00%no cap	$142,954		$142,954	$1,365,351	$100,868	$1,139,132	$26,249,496	Loan in balance: fail
Oct 2028Month 21, Construction		$1,358,546	7.00%no cap	$153,122		$153,122	$1,212,229	$100,868	$1,139,132	$27,761,164	Loan in balance: fail
Nov 2028Month 22, Construction		$1,083,140	7.00%no cap	$161,940		$161,940	$1,050,289	$100,868	$1,139,132	$29,006,244	Loan in balance: fail
Dec 2028Month 23, Construction		$773,923	7.00%no cap	$169,203		$169,203	$881,086	$100,868	$1,139,132	$29,949,371	Loan in balance: fail
Jan 2029Month 24, Construction		$2,990,896	7.00%no cap	$174,705		$174,705	$706,382	$100,868	$1,138,911	$33,114,751	Construction completeLoan in balance: fail
Feb 2029Month 25, Lease-up	1.0%		7.00%no cap	$193,169	-$82,194	$275,364	$513,212	$18,673	$1,138,911	$33,390,115	Loan in balance: fail
Mar 2029Month 26, Lease-up	4.0%		7.00%no cap	$194,776	-$70,216	$264,992	$318,437	$0	$1,087,369	$33,603,563	Lease-up and operating deficit reserve runs outLoan in balance: fail
Apr 2029Month 27, Lease-up	9.1%		7.00%no cap	$196,021	-$50,252	$246,273	$122,416	$0	$1,037,117	$33,799,584	Loan in balance: fail
May 2029Month 28, Lease-up	16.2%		7.00%no cap	$197,164	-$22,302	$219,466	$0	$0	$940,066	$33,922,000	Interest reserve runs outLoan in balance: fail
Jun 2029Month 29, Lease-up	25.3%		7.00%no cap	$197,878	$13,633	$184,245	$0	$0	$755,821	$33,922,000
Jul 2029Month 30, Lease-up	36.4%		7.00%no cap	$197,878	$57,554	$140,324	$0	$0	$615,497	$33,922,000	Outside completion date: pass
Aug 2029Month 31, Lease-up	49.5%		7.00%no cap	$197,878	$109,461	$88,417	$0	$0	$527,080	$33,922,000
Sep 2029Month 32, Lease-up	60.3%		7.00%no cap	$197,878	$152,188	$45,690	$0	$0	$481,390	$33,922,000
Oct 2029Month 33, Lease-up	72.6%		7.00%no cap	$197,878	$200,613		$0	$0	$481,390	$33,922,000
Nov 2029Month 34, Lease-up	86.3%		7.00%no cap	$197,878	$254,734		$0	$0	$481,390	$33,922,000
Dec 2029Month 35, Lease-up	93.5%		7.00%no cap	$197,878	$283,151		$0	$0	$481,390	$33,922,000
Jan 2030Month 36, Lease-up	94.6%		7.00%no cap	$197,878	$287,629		$0	$0	$481,390	$33,922,000	StabilizedDSCR at conversion: passGuarantor liquidity: passOccupancy at conversion: pass
Feb 2030Month 37, Stabilized	94.6%		7.00%no cap	$197,878	$315,598		$0	$0	$481,390	$33,922,000
Mar 2030Month 38, Stabilized	94.6%		7.00%no cap	$197,878	$315,598		$0	$0	$481,390	$33,922,000
Apr 2030Month 39, Stabilized	94.6%		7.00%no cap	$197,878	$315,598		$0	$0	$481,390	$33,922,000	DSCR covenant, quarterly: pass
May 2030Month 40, Stabilized	94.6%		7.00%no cap	$197,878	$315,598		$0	$0	$481,390	$33,922,000
Jun 2030Month 41, Stabilized	94.6%		7.00%no cap	$197,878	$315,598		$0	$0	$481,390	$33,922,000
Jul 2030Month 42, Stabilized	94.6%		7.00%no cap	$197,878	$315,598	$84,805	$0	$0	$396,585	$33,922,000	Extension, fee $84,805Debt yield for extension: passDSCR covenant, quarterly: passDSCR for extension: passGuarantor liquidity: passLoan to value for extension: pass
Aug 2030Month 43, Stabilized	94.6%		7.00%cap on record	$197,878	$315,598		$0	$0	$396,585	$33,922,000
Sep 2030Month 44, Stabilized	94.6%		7.00%cap on record	$197,878	$315,598		$0	$0	$396,585	$33,922,000
Oct 2030Month 45, Stabilized	94.6%		7.00%cap on record	$197,878	$315,598		$0	$0	$396,585	$33,922,000	DSCR covenant, quarterly: pass
Nov 2030Month 46, Stabilized	94.6%		7.00%cap on record	$197,878	$315,598		$0	$0	$396,585	$33,922,000
Dec 2030Month 47, Stabilized	94.6%		7.00%cap on record	$197,878	$315,598		$0	$0	$396,585	$33,922,000
Jan 2031Month 48, Stabilized	94.6%		7.00%cap on record	$197,878	$315,598		$0	$0	$396,585	$33,922,000	DSCR covenant, quarterly: pass
Feb 2031Month 49, Stabilized	94.6%		7.00%cap on record	$197,878	$323,488		$0	$0	$396,585	$33,922,000
Mar 2031Month 50, Stabilized	94.6%		7.00%cap on record	$197,878	$323,488		$0	$0	$396,585	$33,922,000
Apr 2031Month 51, Stabilized	94.6%		7.00%cap on record	$197,878	$323,488		$0	$0	$396,585	$33,922,000	DSCR covenant, quarterly: pass
May 2031Month 52, Stabilized	94.6%		7.00%cap on record	$197,878	$323,488		$0	$0	$396,585	$33,922,000
Jun 2031Month 53, Stabilized	94.6%		7.00%cap on record	$197,878	$323,488		$0	$0	$396,585	$33,922,000
Jul 2031Month 54, Stabilized	94.6%		7.00%cap on record	$197,878	$323,488	$84,805	$0	$0	$311,780	$33,922,000	Extension, fee $84,805Debt yield for extension: passDSCR covenant, quarterly: passDSCR for extension: passGuarantor liquidity: passLoan to value for extension: pass
Aug 2031Month 55, Stabilized	94.6%		7.00%no cap	$197,878	$323,488		$0	$0	$311,780	$33,922,000
Sep 2031Month 56, Stabilized	94.6%		7.00%no cap	$197,878	$323,488		$0	$0	$311,780	$33,922,000
Oct 2031Month 57, Stabilized	94.6%		7.00%no cap	$197,878	$323,488		$0	$0	$311,780	$33,922,000	DSCR covenant, quarterly: pass
Nov 2031Month 58, Stabilized	94.6%		7.00%no cap	$197,878	$323,488		$0	$0	$311,780	$33,922,000
Dec 2031Month 59, Stabilized	94.6%		7.00%no cap	$197,878	$323,488		$0	$0	$311,780	$33,922,000
Jan 2032Month 60, Stabilized	94.6%		7.00%no cap	$197,878	$323,488		$0	$0	$311,780	$33,922,000	DSCR covenant, quarterly: pass
Feb 2032Month 61, Stabilized	94.6%		7.00%no cap	$197,878	$331,575		$0	$0	$311,780	$33,922,000	Refinance

Every covenant test: date, required, projected, headroom, status and cure
Test date	Covenant	Required	Projected	Headroom	Status	Cure (exact)
Aug 2028 (month 19)	Loan in balanceSources $11,355,165 (undrawn commitment and cash with the lender) against uses $12,012,907 to month 42	Sources cover uses	Short $657,742	-$657,742	Fail	Balancing deposit $657,742
Sep 2028 (month 20)	Loan in balanceSources $9,415,599 (undrawn commitment and cash with the lender) against uses $10,073,342 to month 42	Sources cover uses	Short $657,742	-$657,742	Fail	Balancing deposit $657,742
Oct 2028 (month 21)	Loan in balanceSources $7,672,504 (undrawn commitment and cash with the lender) against uses $8,330,246 to month 42	Sources cover uses	Short $657,742	-$657,742	Fail	Balancing deposit $657,742
Nov 2028 (month 22)	Loan in balanceSources $6,160,836 (undrawn commitment and cash with the lender) against uses $6,818,578 to month 42	Sources cover uses	Short $657,742	-$657,742	Fail	Balancing deposit $657,742
Dec 2028 (month 23)	Loan in balanceSources $4,915,756 (undrawn commitment and cash with the lender) against uses $5,573,498 to month 42	Sources cover uses	Short $657,742	-$657,742	Fail	Balancing deposit $657,742
Jan 2029 (month 24)	Loan in balanceSources $3,972,629 (undrawn commitment and cash with the lender) against uses $4,630,371 to month 42	Sources cover uses	Short $657,742	-$657,742	Fail	Balancing deposit $657,742
Feb 2029 (month 25)	Loan in balanceSources $807,249 (undrawn commitment and cash with the lender) against uses $1,464,771 to month 42	Sources cover uses	Short $657,522	-$657,522	Fail	Balancing deposit $657,522
Mar 2029 (month 26)	Loan in balanceSources $531,885 (undrawn commitment and cash with the lender) against uses $1,189,407 to month 42	Sources cover uses	Short $657,522	-$657,522	Fail	Balancing deposit $657,522
Apr 2029 (month 27)	Loan in balanceSources $318,437 (undrawn commitment and cash with the lender) against uses $924,415 to month 42	Sources cover uses	Short $605,979	-$605,979	Fail	Balancing deposit $605,979
May 2029 (month 28)	Loan in balanceSources $122,416 (undrawn commitment and cash with the lender) against uses $678,143 to month 42	Sources cover uses	Short $555,727	-$555,727	Fail	Balancing deposit $555,727
Jul 2029 (month 30)	Outside completion date	Jul 2029	Jan 2029	+6 months	Pass
Jan 2030 (month 36)	DSCR at conversionNOI $2,575,554 over debt service $2,374,540	1.00x	1.08x	+0.08x	Pass
Jan 2030 (month 36)	Guarantor liquidity	$2,000,000	$2,342,258	+$342,258	Pass
Jan 2030 (month 36)	Occupancy at conversion	85.00%	94.60%	+9.60 pts	Pass
Apr 2030 (month 39)	DSCR covenant, quarterlyNOI $3,787,177 over debt service $2,374,540	1.20x	1.59x	+0.39x	Pass
Jul 2030 (month 42)	Debt yield for extension	8.00%	11.16%	+3.16 pts	Pass
Jul 2030 (month 42)	DSCR covenant, quarterlyNOI $3,787,177 over debt service $2,374,540	1.20x	1.59x	+0.39x	Pass
Jul 2030 (month 42)	DSCR for extensionNOI $3,787,177 over debt service $2,374,540	1.15x	1.59x	+0.44x	Pass
Jul 2030 (month 42)	Guarantor liquidity	$2,000,000	$2,257,453	+$257,453	Pass
Jul 2030 (month 42)	Loan to value for extension	65.00%	49.27%	+15.73 pts	Pass
Oct 2030 (month 45)	DSCR covenant, quarterlyNOI $3,787,177 over debt service $2,374,540	1.20x	1.59x	+0.39x	Pass
Jan 2031 (month 48)	DSCR covenant, quarterlyNOI $3,787,177 over debt service $2,374,540	1.20x	1.59x	+0.39x	Pass
Apr 2031 (month 51)	DSCR covenant, quarterlyNOI $3,881,857 over debt service $2,374,540	1.20x	1.63x	+0.43x	Pass
Jul 2031 (month 54)	Debt yield for extension	8.00%	11.44%	+3.44 pts	Pass
Jul 2031 (month 54)	DSCR covenant, quarterlyNOI $3,881,857 over debt service $2,374,540	1.20x	1.63x	+0.43x	Pass
Jul 2031 (month 54)	DSCR for extensionNOI $3,881,857 over debt service $2,374,540	1.15x	1.63x	+0.48x	Pass
Jul 2031 (month 54)	Guarantor liquidity	$2,000,000	$2,172,648	+$172,648	Pass
Jul 2031 (month 54)	Loan to value for extension	65.00%	48.07%	+16.93 pts	Pass
Oct 2031 (month 57)	DSCR covenant, quarterlyNOI $3,881,857 over debt service $2,374,540	1.20x	1.63x	+0.43x	Pass
Jan 2032 (month 60)	DSCR covenant, quarterlyNOI $3,881,856 over debt service $2,374,540	1.20x	1.63x	+0.43x	Pass

Covenant library (sample terms)

Covenant library: type, definition, required level and cure terms
Covenant	Type	Required	Definition	Tested	Cure terms
Loan in balanceThe term sheet's in-balance test at each draw. Sources: the undrawn commitment, including the interest and lease-up reserves the loan funds, and cash on deposit with the lender. Uses: cost to finish with retainage, interest less the operating income applied to it, and operating deficits, to the later of stabilization and the initial maturity. The sponsor's deficit commitment is not a source.	Loan in balance	Sources cover uses	Uses to Jul 2030 (month 42): the later of stabilization and the initial maturity. Extension fees are not in them.	Each loan advance: months 19 to 28	Before the next advance, deposit with the lender the amount that brings remaining sources up to remaining uses. The lender makes no advance while the loan is out of balance.
DSCR covenant, quarterlyThe loan record's 1.20x minimum debt service coverage from stabilization, tested each quarter end on the trailing three months.	Debt service coverage	Required level for DSCR covenant, quarterlyx	NOIDebtLender-held reserves count as income	Apr 2030, Jul 2030, Oct 2030, Jan 2031, Apr 2031, Jul 2031, Oct 2031, Jan 2032	No cash cure in the loan record. Below it, excess cash is held by the lender until two consecutive quarters are back above it (sample text).
DSCR at conversionThe loan converts from construction to its operating period only if income, with the lender-held reserves counted, covers interest.	Debt service coverage	Required level for DSCR at conversionx	NOIDebtLender-held reserves count as income	Jan 2030	Within 30 days, pay down the loan or deposit cash to the interest reserve in the amount that restores 1.00x.
DSCR for extensionEach twelve month extension is granted only at this coverage on the trailing 3 months, the loan record's condition: interest only, the debt service the loan pays.	Debt service coverage	Required level for DSCR for extensionxSample level: 1.15x per the loan record; /funding previously used 1.20x.	NOIDebtLender-held reserves count as income	Jul 2030, Jul 2031	Pay the loan down to the balance that passes before the extension is granted.
Debt yield for extensionAnnualized NOI over the loan balance, tested with each extension.	Debt yield	Required level for Debt yield for extension%	NOI	Jul 2030, Jul 2031	Pay the loan down to the balance that passes before the extension is granted.
Loan to value for extensionValue is annualized NOI at a 5.50% cap rate.	Loan to value	Required level for Loan to value for extension%	NOIValue at a 5.50% cap rate	Jul 2030, Jul 2031	Rebalancing paydown to the passing balance.
Outside completion dateSubstantial completion by this date, under the completion guaranty.	Completion date	Jul 2029	Projected completion against the outside date	Jul 2029	No cash cure. Missing it is a default unless the lender extends the date.
Occupancy at conversionPhysical occupancy at the conversion test.	Occupancy	Required level for Occupancy at conversion%	Physical occupancy at the test month	Jan 2030	No cash cure. Below it, excess cash is swept to the lender until it is met.
Guarantor liquidityThe guarantor's unencumbered cash and securities, after funding the deficit commitment and any gap.	Minimum liquidity	Required level for Guarantor liquidity$	Guarantor liquidity $3,000,000 at Jul 2028 (sample), less what it funds	Jan 2030, Jul 2030, Jul 2031	Restore liquid assets within 30 days of the compliance certificate.