Before a building goes up, the ground has to be prepared. Roads, utilities, drainage, and grading all come first. These early elements, known as horizontal construction, form the foundation of any successful development. Without them, nothing else moves forward.
Horizontal construction financing allows developers to complete this critical phase before vertical permits are issued, or buildings can begin. It also gives municipalities and lenders the confidence that the project is progressing with the right structure.
What Horizontal Financing Covers
This loan type typically supports:
- Grading and leveling of raw land
- Construction of site access points such as roads and driveways
- Installation of sewer, water, and stormwater systems
- Power, gas, and telecommunications infrastructure
- Curbs, gutters, sidewalks, and street lighting
- Perimeter walls, fencing, and basic landscaping
These improvements are often required by local municipalities before vertical permits will be approved. In other words, horizontal financing is what makes the next phase of development even possible.
Why This Step Matters
For a project to stay on track, financing must be in place before work begins. Delays in horizontal funding often cause a cascade of setbacks. Vertical lenders typically will not issue term sheets until infrastructure is complete. Municipalities may withhold permits or occupancy approvals. Contractors cannot mobilize until access and utilities are confirmed.
When planned and executed correctly, horizontal financing increases a property’s usability, value, and readiness. Raw land transitions into a build-ready site, and the development can begin generating momentum.
Historical data also supports this. Entitled land with utilities in place generally sees a significant increase in market value compared to raw land. The investment in infrastructure improves liquidity, resale options, and appeal to both end users and investors.
Common Borrower Challenges
Borrowers often underestimate the cost and complexity of the horizontal phase. Site work costs can vary widely depending on soil conditions, offsite utility requirements, and local agency mandates. Construction timelines are subject to weather, inspections, and third-party coordination.
Having financing that aligns with these realities, both in structure and timing, is critical. If funds are delayed or released in the wrong sequence, entire project schedules can shift. That is where an experienced private lender becomes essential.
A Strategic Role for Brokers
Brokers play a pivotal role in preparing borrowers for this stage. While developers often focus on vertical construction, site work is where many of the risks and delays occur.
The most effective brokers:
- Educate clients on the need for dedicated horizontal financing
- Help phase the capital stack in a way that aligns with construction milestones
- Provide lenders who can move quickly and underwrite based on real project conditions
- Anticipate municipal approval requirements and how they tie to disbursement timing
In doing so, brokers position themselves as long-term strategic partners, not just deal originators.
Real-World Examples
Residential Development in South Lake Tahoe, California:
In South Lake Tahoe, a developer needed capital to unlock a complex site for future residential use. Enact provided a horizontal loan to fund entitlement work, permitting, and early infrastructure. With flexible terms and direct access to decision-makers, the project progressed without delays or refinancing pressure. View project
Land Development in Alton, Texas:
In Alton, TX, a seasoned developer needed capital to complete horizontal improvements on 9 acres entitled for residential multifamily use. Enact funded the work, supporting a shovel-ready site with 30 lots and signed sale agreements on nearly all of them.
View project
What to Look for in a Lending Partner
Not all lenders are equipped to finance horizontal work. Many focus exclusively on vertical projects, which means they may not have the flexibility to fund grading, offsites, or complex utility schedules.
The right lending partner understands:
- How to underwrite to early-stage construction
- The connection between municipal timelines and disbursement
- The importance of phasing, timing, and execution across the capital stack
At Enact Partners:
Our team works directly with developers, brokers, and consultants to ensure every stage is properly sequenced and supported.
Planning a development that needs financing from the ground up? Enact can help structure a horizontal loan that aligns with your project timeline and budget. Send your construction project information to our team at via our Loan Request Form or call our Lending Team at
760-516-7776.
