In the event of a cost overrun incurred on a project during its construction phase, how may the additional costs be addressed for permanent financing?
The borrower should contact both the primary lender and Preferred to discuss the change in condition. Since the authorization was based on a specific project costs Preferred in conjunction with SBA to determine the impact on the original loan commitment. The cost overruns must be reflected in the appraisal. Otherwise, the costs must be paid by the borrower.
