interim financing(redirected from Interim Loan)
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A short-term loan arranged in order to buy time until something changes. At the end of the original construction loan period, a developer may wish to seek interim financing rather than permanent financing because of an expectation that interest rates will fall in the future, or because the developer's plans have changed and the property will be sold rather than retained. The problem with permanent financing and many development projects is the existence of very large prepayment penalties—one cannot simply refinance when interest rates go down or simply pay off the loan when there is a sale. A borrower may also seek interim financing because the borrower's financial strength, or that of income-producing property serving as collateral, is not currently sufficient to justify attractive financing terms.