InsightsThe problem it solves
When a condominium completes, the construction loan matures — but the remaining unsold units still hold a large share of the project's value. Selling every unit before repaying the construction lender is rarely possible, and discounting units to sell fast destroys the margin the project was built on.
An inventory loan refinances the construction debt against the completed units, giving the sponsor time to sell at market pace. It is a form of bridge financing: speed-focused capital for a transitional asset, sized against the value of the finished inventory rather than the cost of building it.
When sponsors use one
Three situations come up most. First, the construction loan is maturing and a meaningful share of units is unsold. Second, the sponsor wants to hold units through a slow sales window rather than cut prices. Third, the sponsor wants to pull equity out of finished inventory to fund the next project while the current one sells down.
The same logic applies beyond condos. A serviced-lot subdivision in Simcoe County carried an $8.7M land inventory bridge while the balance of the plan worked through approvals — the asset was different, but the need was the same: capital against finished or near-finished inventory that the market had not yet absorbed.
How it is structured
Inventory facilities are short term and sized against the net sell-out value of the remaining units, with release prices set per unit so the loan pays down as units close. Because the asset is complete, construction risk is gone — pricing and leverage reflect lease-up or sell-out risk instead.
Terms are negotiated on the whole file: rate, fees, release schedule, extension options and prepayment. Comparing competing term sheets on those points, rather than the headline rate alone, is where most of the value is won or lost.
Is your project a fit?
If your construction loan is approaching maturity with units still to sell, an indicative term sheet will show what the inventory can support. Files are reviewed within 24 hours, and the structure — senior bridge, or bridge plus a junior layer — is set before any lender is approached.