A decade ago, most condominium associations would not have considered applying for a bank loan, and a good thing - because they would have been hard-pressed to find a bank willing to make one.  Today, associations will find that banks are not only willing to lend them money, but anxious to do so.

From the lender's perspective, the loan collateral (common area fees) and the priority "super lien," (ensuring the association's ability to collect those fees) make association loans as close to risk-free as any loan could be.  Bankers will tell you that making loans on which the loss rate historically has been virtually nil is close to a no-brainer.  "In 30 years of originating these loans," one area banker told me, "I've never had to write one off." 

The decision-making for community associations will be a bit more complicated as they weigh the pros and cons of using bank loans, special assessments or reserves to meet their financing needs.  There are two schools of thought on this.  Some industry experts say associations should make reserves the first choice and special assessments the second for financing major capital projects, turning to bank loans only for unanticipated or emergency expenditures they can't finance otherwise.  Others suggest precisely the opposite:  Use loans for planned repair and replacement projects and rely on reserves   (or assessments) for emergencies.