Home
Financial Modeling
Capital Advisory
Offering Memoranda
Market/Feasibility Analysis
Site search
Sample "Manual Iterations" for a Construction Loan
Enter the values in the light blue cells and press the "Update" button to run the model.
Automatic Iterations
Soft costs for a construction project are often estimated as a percentage of hard costs and are then themselves financed.
However, by financing interest, one ends up with a circular loop in Excel. How can we avoid this?
The following is a nice example of how to use manual iterations to solve this problem to a high level of accuracy.
Unlike automatic iterations, this does not require a circular reference and as such, it's much faster than the method that most people use.
Without Circular References
Iteration 1
Hard Costs
Soft Costs
plus interest
Total
Interest Rate
per year
LTV
Financable Cost
s
Month
Draw
Interest
Total Draw
Ending Balance
1
2
3
4
5
6
7
8
9
10
11
12
Iteration 2
Hard Costs
Soft Costs
plus interest
SubTotal
Interest from Pre
vious Iteration
Total
Interest Rate
per year
LTV
Financable Cost
s
Month
Draw
Interest
Total Draw
Ending Balance
1
2
3
4
5
6
7
8
9
10
11
12
Iteration 3
Hard Costs
Soft Costs
plus interest
SubTotal
Interest from Pre
vious Iteration
Total
Interest Rate
per year
LTV
Financable Cost
s
Month
Draw
Interest
Total Draw
Ending Balance
1
2
3
4
5
6
7
8
9
10
11
12
Iteration 4
Hard Costs
Soft Costs
plus interest
SubTotal
Interest from Pre
vious Iteration
Total
Interest Rate
per year
LTV
Financable Cost
s
Month
Draw
Interest
Total Draw
Ending Balance
1
2
3
4
5
6
7
8
9
10
11
12
Iteration 5
Hard Costs
Soft Costs
plus interest
SubTotal
Interest from Pre
vious Iteration
Total
Interest Rate
per year
LTV
Financable Cost
s
Month
Draw
Interest
Total Draw
Ending Balance
1
2
3
4
5
6
7
8
9
10
11
