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Spring Garden Lending

Topic Housing
Geography Maryland

Reinvestment Fund is capitalizing a new loan fund in Baltimore to provide short term construction loans for single family and small multifamily housing developers.

With capital from Reinvestment Fund, Spring Garden Lending (SGL) is able to make short term loans to developers at an average of $200,000. The loans will help smaller developers acquire or renovate single family homes and small multi-family properties. The homes are expected to sell for between $200,000 and $300,000 on average or rent for $1,500-$2,000 per month—pricing that is accessible to buyers and renters at 80%-120% of the area median income.

SGL is a financial services company headquartered in Philadelphia. SGL has successfully developed a product and execution that serves the small developer market that has primarily had to rely on hard money lenders since banks are generally not comfortable with small developer housing construction risk. Its borrowers are typically small-scale developers seeking financing to renovate 1-3 properties at a time.

The new loan fund supports SGL’s expansion to Baltimore, where there is a similar reluctance from local banks to lend to construction projects for unstabilized properties and a significant market for hard money lenders. Given the scale of Baltimore’s vacant housing problem and the current lack of reasonably priced bridge capital for small developers working in transitional neighborhoods, the SGL product is a strong mission fit for Reinvestment Fund.

The project also meets a need within the workforce housing (or naturally occurring affordable housing) market. With subsidies for regulated affordable housing diminishing and much private construction concentrated at the top of the market, there is significant unmet demand for housing that sells or rents at a low price naturally due to low costs of acquisition and renovation. This market has gone unmet in part because tighter bank lending standards for small rehabbers since the financial crisis have left this once robust group of small businesses without capital access. Reinvestment Fund has endeavored to help fill this niche in several ways, and this loan will extend its focus on workforce housing more deeply into the Baltimore market.

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