NEW YORK — The New York City Economic Development Corp., in partnership with Basis Management Group, on Thursday launched the Emerging Developer Loan Fund, which includes $10 million of capital committed by NYCEDC.
The fund will provide affordable pre-development and land acquisition low-interest loans ranging from $100,000 to $2.5 million to developers taking on mixed-income and mixed-use residential, industrial and commercial projects under $30 million.
The fund specifically seeks to facilitate the acquisition process and increase opportunities for emerging developers, which includes many minority and women-owned firms, with annual revenues of less than $10 million.
Many emerging developers, particularly minority and women-owned firms, often face major hurdles in accessing affordable financing as banks will generally only finance 60 to 70 percent of the total project, the NYCEDC noted.
Commercial and industrial developments are also judged to be more high-risk than residential developments, so lending is more costly and difficult for small and emerging developers to secure.
In addition to underwriting loans for the Emerging Developer Loan Fund, Basis Management Group will also provide technical assistance to help emerging developers craft loan packages to facilitate interest from senior lenders, as well as mentorship to help the developers manage their projects in a timely and successful manner.
Basis Management Group, a privately held, minority- and women-owned commercial real estate finance firm, is the official lending partner and manager for the fund, Basis has made commercial real estate loans to minority and women-owned firms in excess of $370 million in the last 3 years.
“The Emerging Developer Loan Fund will help level the playing field for New York City’s burgeoning development firms by addressing what has historically been a real barrier to entry for these types of firms — affordable financing,” said NYCEDC president Maria Torres-Springer. “Through city-led initiatives like these, particularly those that support minority and women-owned businesses, we are making sure that every city dollar spent is an investment in opportunity.”
Brooklyn Borough President Eric L. Adams, said, “To play the game, you need a stake — the financial resources to transform a dream into a bricks-and-mortar reality. Unfortunately, enterprises owned by minorities and women have often been prevented from accessing the lines of credit and other financing required to become a property developer.”
Eligible applicants must be able to demonstrate prior experience completing projects in the city or similar urban areas, and have been in operation for at least three years or are the lead or co-developer with site control on either an acquisition or ground lease project in New York City.