Your Loan Limit Isn't the Same as Available Cash

A builder has a $10 million facility and has borrowed $7 million. The growth plan assumes another $3 million is available whenever needed.

That assumption deserves a closer look at the loan agreement and the current borrowing position. A headline commitment is only one part of the answer. Availability may depend on eligible costs, collateral, inspections, advance rates, project limits and other agreed conditions.

Even an eligible draw has a process and a funding date. If the company must pay a trade before reimbursement arrives, the gap belongs in the cash forecast.

Give each borrowing source its own schedule

List the commitment, outstanding principal, currently supportable availability, maturity, payment requirements and draw process for each facility. Keep assumptions about future approvals separate from funds already available under the agreement.

Attach debt to the homes or projects it funds. At closing, show the required repayment or release amount before treating the remaining receipt as usable cash. Don't count the gross sale proceeds as operating liquidity while leaving the loan payoff elsewhere in the model.

Timing matters across projects, too. A community that closes slower than expected may keep a facility occupied when the next community needs funding. Borrowing capacity that looked adequate on an annual summary can become insufficient during a particular month.

Test more than the rate

For illustration, a two-percentage-point rate increase on a constant $5 million balance adds roughly $100,000 of annual simple interest. That is a meaningful sensitivity. It doesn't capture the separate effect of holding debt longer because sales or construction slowed.

Model the balance and the time outstanding as well as the rate. Include the possibility that a planned refinancing hasn't funded by the original maturity. An assumed renewal should be visible as an assumption, with its decision date and responsible person.

The team's debt calendar should identify reporting deadlines and upcoming discussions early enough to respond. Loan-specific requirements come from the signed documents and the lender, not a generic dashboard definition.

Explain problems while choices remain

A useful lender update connects a changed forecast to identifiable causes, revised dates and management's response. “Three closings moved because utility service is delayed; here is the updated cash need and recovery schedule” is more actionable than an unexplained variance delivered after the shortfall.

The purpose of debt planning is to keep the financing structure aligned with how the business actually builds and sells. Review available borrowing beside unrestricted cash and committed spending. When those three numbers come from different dates or assumptions, the apparent cushion may disappear precisely when the company needs it.