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Small Multifamily Affordable Loan Program (SMAL)

Small Multifamily Affordable Loan Program (SMAL)

The Small Multifamily Affordable Loan Program (SMAL) is designed to increase the supply of affordable rental housing for lower-income individuals. The program makes it easier for developers to build smaller projects than with more traditional sources of funding. One of the benefits of the SMAL Program is that, when used as a sole source of funding, it serves people whose incomes are too high to receive assistance with other KHC programs.

SMAL funding is used for permanent financing and construction. SMAL funds cannot be used for refinancing. Eligible applicants include nonprofit and for-profit builders, developers and units of local government.

Eligible Activities

  • New construction.
  • Substantial rehabilitation.
  • Acquisition / new construction.
  • Acquisition with rehabilitation.

Financial Requirements

  • Loans are recourse loans.
  • Maximum loan request cannot exceed 90 percent loan to value.
  • Loan must be supported by a 1.20-1.25 debt coverage ratio.
  • Interest rate cannot be lower 3.5 percent.
  • Term shall not exceed 30 years.

When SMAL funds are solely used to finance a development, eligible households must have incomes at or below 120 percent of the area median income.  The SMAL Program is extremely flexible and can be combined with other KHC financing to reach lower-income families.

Rents should be projected at 30 percent of the income level of the targeted population and may not exceed the rent limits for this program.  SMAL may not be used for developments exceeding 11 units.

Who Can Apply

Eligible applicants for this source of funding are nonprofit organizations, for-profit entities, and units of local government.