acquisition, development, and construction loan

acquisition, development, and construction (ADC) loan

A loan made to allow a developer to buy land,install infrastructure such as streets and sewers,and build improvements.Because the value of the collateral depends on the development process adding significant value,these are considered somewhat risky loans.As a result,lenders limit the number of ADC loans they extend.A loan turndown from one lender may not be a stamp of disapproval for the project,but simply that lender's inability to extend any more ADC loans until others are paid off or converted to permanent financing.