DEFINITION of 'Floor Loan'

In real estate construction, the minimum loan that a lender agrees to advance in order to enable the builder to commence construction and development of a project. Floor loans apply to buildings that will be occupied by tenants.

BREAKING DOWN 'Floor Loan'

For example, a bank may agree to advance 70% of the total project cost, with the balance of 30% to be released upon the project achieving certain milestones. These milestones typically include a successful sale or lease of the majority of the project's units, obtaining an occupancy permit, etc.

RELATED TERMS
  1. Construction Loan

    A short-term loan used to finance the building of a home or another ...
  2. Future Advance

    A clause in a mortgage which enables the lender to advance funds ...
  3. Combination Loan

    1. A transaction consisting of two separate loans for the same ...
  4. Standing Loan

    A type of loan where payments are made of interest only. Repayment ...
  5. End Loan

    A permanent, long-term loan used to pay off a short-term construction ...
  6. Temporary Lender

    A mortgage lender that sells the loans it originates into the ...
Related Articles
  1. Investing

    Commercial Real Estate Loans

    Obtaining a commercial real estate loan is quite different from borrowing for residential real estate. Here's what to expect and how to get what you need.
  2. Personal Finance

    How To Apply For a Personal Loan

    Learn about different avenues for applying for a personal loan, and learn valuable tips to help you get your personal loan application approved.
  3. Managing Wealth

    Hard Money Loans: Know This Tool for Real Estate Investors

    A hard money loan may be a faster route to financing than a bank loan, but be sure you understand the pluses and minuses before you take one on.
  4. Personal Finance

    Understanding Term Loans

    A loan from a bank for a specific amount that has a specified repayment schedule and a floating interest rate.
  5. Personal Finance

    All About Government Loans

    There are many reasons to seek a government loan rather than one from a private lender. Government loans typically have low interest rates and offer fixed or subsidized options, as well as deferred ...
  6. Personal Finance

    College Loans: Private vs. Federal

    Not all student loans are the same. Know what you're getting into before signing on the dotted line.
  7. Personal Finance

    Student Loan Debt: Is Consolidation The Answer?

    Consolidating your student loans offers convenience, but there are drawbacks.
  8. Retirement

    Business Owners: A Guide To Qualified Retirement Plan Loans

    Thinking of adding a loan feature to your company's plan? Here's what you need to know.
  9. Financial Advisor

    Tips To Improve Chances Of A Small Business Loan

    Enhance your small business loan eligibility by keeping these important tips in mind.
RELATED FAQS
  1. Why is a bank guarantee important in a long-term project contract?

    Understand what a bank guarantee is and learn why it is so important to the risk and safety of a long-term project contract Read Answer >>
  2. What are the differences between delinquency and default?

    Find out more about loan delinquency, loan default, and the difference between a loan borrower defaulting and being delinquent ... Read Answer >>
  3. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  4. Does the FHA provide construction loans?

    Learn how you can save with FHA-insured construction and rehabilitation mortgages that allow you to finance construction ... Read Answer >>
  5. What’s the Difference Between a Mortgage Lender and a Mortgage Servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
Hot Definitions
  1. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  2. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  3. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center