Builders working across the Southeast are managing some of the fastest-moving residential markets in the country, and the financing behind those projects often hasn't kept pace. Most builders still piece together separate loans for land acquisition, horizontal development, and vertical construction, then re-prove the deal to a lender at every stage.
An acquisition, development, and construction (AD&C) loan removes that friction by funding all three phases through one facility and is structured around how Southeast projects actually move from dirt to finished homes.
What is an AD&C Loan
An AD&C loan is a single financing facility that covers land acquisition, horizontal development, and vertical construction under one credit structure. Some lenders write it as an ADC loan instead, dropping the ampersand, but the structure is identical either way. Instead of closing three separate loans with three separate lenders, builders close once and draw against the same facility as the project moves from raw land to finished lots to completed homes.
These terms only work as a single facility, which is the entire point. A builder isn't negotiating one rate for land, another for development, and a third for construction. The same approval carries one set of terms across all three phases.
Multiple properties sitting under one loan matter for builders running phased subdivisions rather than single lots.
That structure is the acquisition, development, and construction loan model in practice. One underwriting decision carries the deal from acquisition through completion, rather than resetting at every phase line.
Where Fragmented Financing Breaks Down for Builders
Multiple properties sitting under one loan matter for builders running phased subdivisions rather than single lots. For a builder taking out different structures for each phase, every additional loan in the stack adds a new point where the deal can stall:
- Each phase closes separately, so a builder signs multiple sets of loan documents instead of one
- Each phase gets re-underwritten from scratch, even though the lender already approved the land and the plan
- The construction lender isn't bound by what the acquisition and development lender agreed to, so approval at one phase guarantees nothing at the next
A lender that approved the acquisition and development loan has no obligation to carry the same terms, or even the same approval, into construction. Builders can find themselves shopping for a new construction lender mid-project, sometimes after the land is already entitled and the clock is already running.
Timing Gaps and Carry Costs Between Stages
The gap between when horizontal development wraps and when construction financing actually closes is where margin disappears. Builders end up carrying land costs out of pocket or scrambling to bridge the gap with short-term capital that wasn't part of the original deal math.
A project that worked on paper at acquisition can lose its margin entirely by the time vertical construction starts, not because the underlying numbers changed, but because the financing timeline didn't match the construction timeline.
Loan-to-Cost vs Loan-to-Value Confusion
Builders often don't get clarity upfront on how a lender will value a deal at each stage. Land basis at acquisition, appraised value after development, and stabilized value after construction are three different numbers, and a lender that doesn't specify which one applies at which draw makes it nearly impossible to plan equity needs accurately.
In states like Georgia, the state's new housing authorization rate dropped from 17.1 units per 1,000 existing homes in 2022 to 14.6 in 2024, an 11.8% pullback even as demand in metro markets keeps climbing. Fewer units chasing the same demand makes the appraised value at each phase harder to predict, which is exactly when a lender needs to specify which valuation applies at which draw rather than leaving the builder to guess.
How a Single AD&C Facility Changes the Math
Consolidating all three phases into one AD&C loan removes the operational friction that shows up right when a builder is ready to start vertical construction. There's one underwriting cycle, one closing, and one set of terms that carries through the entire project. The timing gap between development wrap and construction start closes because the same lender, the same facility, and the same exposure limit are already in place.
For builders running multiple projects, that exposure limit matters more than any single loan term. Builders Capital structures AD&C facilities around an annual capital capacity of up to $350MM, which means capital deploys across projects without restarting for every new deal.
Recourse and Personal Guarantee Exposure
Stacking separate loans across acquisition, development, and construction often means stacking separate personal guarantees on top of each other. Each lender wants its own recourse position, and that adds up fast for a builder managing more than one phase or project at a time. A single AD&C loan consolidates that exposure into one guarantee structure instead of three, which frees up more of a builder's personal balance sheet for the next deal rather than tying it to the last one.
Why Southeast Entitlement Timelines Vary So Much
One regional commission approves plats for unincorporated Hamilton County and Chattanooga, while five more cities, including Collegedale and Signal Mountain, each run their own separate planning commission
Whichever local planning commission or governing authority has adopted regulations for that jurisdiction
The same loan structure has to account for two different state-level approval clocks, plus county-by-county variation inside each one.
Where Lenders Without Regional Experience Get It Wrong
A lender unfamiliar with Southeast entitlement timelines tends to default to outside assumptions or to treat entitlement risk as more conservative than it actually is. One concrete example is access. Georgia's own driveway permit standard requires that individual drives aren't approved for newly subdivided lots under 5 acres, meaning subdivision streets are required instead, which changes how horizontal development has to be sequenced before vertical construction can begin.
This matters most in the growth corridors where builders are concentrating their pipelines. Murfreesboro, Franklin, and Hendersonville anchor Nashville's suburban expansion, and the underlying numbers show why permitting speed carries real weight there:
- Murfreesboro's population grew roughly 19.1% between 2017 and 2022
- Rutherford County has since passed Hamilton County to become Tennessee's fourth most populous county
- Atlanta's permit activity concentrates unevenly across the metro's two dozen counties rather than spreading evenly across the region
A lender underwriting on outdated regional assumptions is underwriting against a market that has already moved.
What Lender Fluency in the Southeast Actually Looks Like
Regional fluency means knowing which county-level approval process applies to a deal before underwriting it, not after the builder runs into the permitting clock. An entitled lot in one Tennessee county doesn't entitle the same way two counties over, and a lender that treats entitlement risk as uniform across the state is underwriting blind in at least one direction.
Draws and the horizontal-to-vertical timing within an AD&C facility need to be structured around the actual permitting clock for that specific jurisdiction, not a generic regional assumption carried over from a different market.
Builders Capital lends across 44 states, with the Southeast (Mississippi, Alabama, Georgia, Florida, Tennessee, and Kentucky) named as one of six regional footprints rather than folded into a single national standard.
Scaling Across Multiple Deals Without Starting Over
Builders running multiple phases or subdivisions at once want a lender relationship that moves with them deal to deal, not a lender that treats every new phase as a from-scratch credit decision.
That's where community banks tend to hit a ceiling.
Many GA and TN builders have outgrown what a local bank can lend on a single project or in aggregate across a growing pipeline, while still being too early-stage for the largest national capital sources to take an interest.
Builders Capital's pipeline-based lending model is built specifically around that scaling friction, deploying capital across projects under one relationship instead of resetting the underwriting process for each new acquisition.
Who an AD&C Facility Fits Best
This structure isn't built for a builder doing a single spec home once a year. An acquisition development and construction loan is built for the builder who is already managing land, development, and construction across more than one active project and is tired of re-proving the deal to a different lender at every phase line.
If fragmented financing has been adding closings, recourse, and carry cost to deals that already worked on paper, an AD&C loan is worth a direct conversation.
Discuss your pipeline with Builders Capital and find out what a single facility looks like for your next acquisition.