Construction financing has a way of humbling everyone involved. Borrowers arrive with big visions, lenders bring disciplined structures, and then reality sets in. The projects that succeed aren’t the ones with the flashiest designs or the most polished spreadsheets. They are the ones where both borrower and lender build their plans around what will actually happen on the ground.
At Enact Partners, we’ve financed everything from transitional properties to multi-phase developments. What we see time and again is that successful projects come down to preparation, discipline, and the ability to adapt when conditions shift.
Permits and entitlements are more than paperwork
Many borrowers approach financing as if permits and entitlements are just another box to check. In practice, they set the pace for the entire project. Local rules can shape when site work starts, how long it can continue, and what hurdles must be cleared before moving to the next stage.
In mountain regions, for example, grading seasons limit when heavy site work can occur. In other jurisdictions, considerations around wetlands or endangered species require additional approvals. None of these rules exist to slow projects down — they exist to protect the environment and community — but they directly affect timelines.
For borrowers, the lesson is simple: a realistic construction loan request has to reflect these local requirements. And for lenders, part of the underwriting process is confirming directly with planning departments that the entitlements and approvals are complete.
Case Study: South Lake Tahoe
One of the clearest examples of this dynamic came in a recent loan we closed in South Lake Tahoe. The borrower had spent years securing entitlements and knew the Tahoe Basin’s unique requirements inside and out. He understood that grading deadlines and environmental protections would shape the schedule, and he planned accordingly.
Enact Partners provided a bridge loan that combined a refinance of existing land debt with new funding for horizontal improvements — tree removal, grading, utilities, paving, and site preparation for a multi-phase residential development. The initial loan was in the low-to-mid $2 million range. As the project advanced, we increased the financing to about $3.35 million to carry the borrower into the next phase.
The structure included an interest reserve sized to cover the full term of the loan, along with a draw schedule aligned to construction milestones. Multiple parcels were pledged as collateral, which reduced risk and supported the larger vision for the development.
What borrowers should take away
The South Lake Tahoe loan underscored several lessons that apply broadly to construction financing:
- Timing drives structure. Paper schedules are only as good as the approvals and environmental conditions that make them possible.
- Entitlements matter. They prove that a project can proceed and are one of the first things lenders verify.
- Collateral should fit the vision. A loan supported by multiple parcels or related real estate can provide stability to see a project through.
- Exits must be credible. Whether the plan is vertical financing or the sale of improved lots, repayment strategies have to be more than optimistic ideas.
Bridge loans as a practical solution
Many projects don’t fit neatly into conventional financing. Bridge loans fill that gap. They provide the capital to carry a project from raw land or early entitlement stages through site readiness, and ultimately to vertical construction or sale.
These loans are not meant to be permanent, and they aren’t designed for flash. They are designed to create momentum at the most critical stage of a project. For borrowers, they provide time and flexibility. For lenders, they balance risk by aligning loan terms with project milestones.
A final thought
Construction loans teach the same lesson again and again: good projects live or die by planning. Financing can only support what is achievable in the field. When borrowers anticipate the requirements of their market, structure their financing realistically, and communicate clearly with their lenders, projects are far more likely to move from dirt to doors.
If you would like to learn more about how construction loans are structured and what lenders look for, visit our Construction Loans page for more details.
