Floor Loan

AAA

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.

INVESTOPEDIA EXPLAINS '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 Mortgage

    A loan borrowed to finance the construction of a home and typically ...
  2. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  3. Bridge Loan

    A short-term loan that is used until a person or company secures ...
  4. Construction Loan Note - CLN

    A short-term obligation in the form of a note, used for the funding ...
  5. End Loan

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

    A loan amount that may be drawn down, or is due to be contractually ...
Related Articles
  1. Is Loan Protection Insurance Right For ...
    Insurance

    Is Loan Protection Insurance Right For ...

  2. Avoid The Generation Debt Trap
    Credit & Loans

    Avoid The Generation Debt Trap

  3. Home-Equity Loans: What You Need To ...
    Options & Futures

    Home-Equity Loans: What You Need To ...

  4. Payday Loans Don't Pay
    Options & Futures

    Payday Loans Don't Pay

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center