Purpose
Paydowns enable lenders and owners to model and record when one funding source is used to pay down the principal balance of a Debt funding source. For example, LIHTC equity can be used to pay down a construction loan.
You can create Paydowns as negative Sources in Sources & Uses to keep the deal balanced, and then execute those Paydowns within Draw Management to record the actual funding movement. Paydown activity is reflected in funding balances, transactions, and Draw Package outputs.
Key Features
Paydowns as negative Sources: Create a Paydown at the deal level in Sources & Uses. It appears as a negative line item and reduces Total Sources by the Paydown amount, keeping the deal balanced.
Execution within a Draw: Execute a Paydown inside an in-progress Draw to record which funding source is providing the funds and which Debt funding source is being paid down.
Modify and unexecute: Update a Paydown amount in Sources & Uses before finalizing, or unexecute a Paydown within an in-progress Draw to revise its execution.
Reversals: Offset previously executed Paydown activity by entering a negative amount through the Execute Paydown experience.
Disbursement and transaction visibility: Review executed Paydowns in Disbursements as a Principal Payment, and review the resulting financial activity on the Transactions page after transfer.
Draw Package representation: The exported Draw Package includes the Paydown as a negative Source so the package reflects the offset in the same financial structure as the Draw.
Target Users
Lenders and owners who need to model and record when one funding source is used to pay down the principal balance of a Debt funding source on a deal.
Prerequisites
Before you create and execute a Paydown, make sure the deal has the funding structure required to support the transaction.
Set up the applicable funding sources for the deal.
Ensure a Debt funding source is available to receive the Paydown.
Ensure you have access to create and manage Paydowns.
Before executing a Paydown, ensure the receiving Debt funding source has an existing principal balance available to pay down.
How It Works
Create a Paydown in Sources & Uses
Create the Paydown at the deal level before you execute it within a Draw. The Paydown is represented as a negative Source and reduces Total Sources by the Paydown amount.
Step-by-Step Instructions:
Open the applicable deal.
Navigate to Sources & Uses.
Click Edit.
In the Sources grid, click Create Paydown.
Enter a name for the Paydown.
Enter the Paydown amount.
Optionally, enter a description for the Paydown.
Save the Paydown.
Confirm the Paydown appears as a negative line item in the Sources grid.
Confirm Sources & Uses are balanced.
Finalize Sources & Uses.
After Sources & Uses are finalized, the Paydown is available for execution within Draw Management.
Note:
You can create multiple Paydowns when a deal requires more than one negative Source. Each Paydown appears as a separate line item in the Sources grid and contributes to the Sources & Uses balance.
Execute a Paydown in Draw Management
After you create and finalize a Paydown in Sources & Uses, execute it within a Draw to record which funding source is providing the funds and which Debt funding source is being paid down.
Step-by-Step Instructions:
Open your deal and navigate to Draw Management.
Select the in-progress Draw where you want to execute the Paydown.
Open Sources & Uses and click Edit.
Locate the Paydown in the Sources grid.
Click Execute Paydown.
Select the Funding Source that will provide the Paydown funds.
Select the Receiving Source. The Receiving Source must be classified as Debt.
Enter the Paydown Amount.
Click Execute Paydown.
Review the updated Funding Amount values.
Save the Draw.
The Funding Amount updates to reflect the Paydown funding, and the Paydown is represented as a negative funding amount.
If a funding source is also providing normal funding for the Draw, its Funding Amount includes both the Draw funding and the Paydown funding. For example:
Draw funding from LIHTC Equity: $100,000
Paydown funding from LIHTC Equity: $25,000
Total funding from LIHTC Equity: $125,000
Modify a Paydown in Sources & Uses
To change the Paydown amount before Sources & Uses are finalized:
Open the deal and navigate to Sources & Uses.
Click Edit.
Locate the Paydown in the Sources grid.
Edit the Paydown.
Update the Paydown amount.
Save your changes.
Review Total Sources and confirm Sources & Uses remain balanced.
Updating the Paydown amount recalculates the Paydown values and the resulting Sources & Uses balance.
Unexecute or Change a Paydown in a Draw
If you need to change a Paydown after executing it within an in-progress Draw, unexecute the Paydown first. This allows you to revise the execution while keeping the related funding values synchronized.
Open the Draw in Draw Management.
Locate the executed Paydown.
Select the option to unexecute the Paydown.
Update the Paydown execution as needed.
Execute the Paydown again.
Review the updated funding values.
Save the Draw.
Note:
After a Paydown is executed, the associated funding values are locked to maintain the relationship between the Paydown and its funding.
Reverse a Paydown
Use a Paydown reversal when you need to offset previously executed Paydown activity. A reversal is recorded by entering a negative amount through the Execute Paydown experience.
Open the applicable Draw in Draw Management.
Locate the Paydown.
Open the Execute Paydown experience.
Select the applicable Funding Source.
Select the applicable Receiving Source.
Enter the reversal as a negative Paydown amount.
Execute the Paydown.
Review the updated funding values.
Save the Draw.
The reversal records the corresponding offsetting Paydown activity.
Track Paydown Disbursements and Transactions
Paydown activity can be reviewed as it moves through the Draw workflow. For lender workflows, an executed Paydown is represented in Disbursements, and after transfer you can review the resulting financial activity on the Transactions page.
Disbursements
For lender workflows, review the Paydown in Disbursements as a Principal Payment to the receiving Debt source. Confirm the:
Funding Source
Receiving Source
Paydown amount
Paydown-generated transaction details are derived from the executed Paydown.
Note:
Paydown Disbursements are not applicable to Construction Financials.
Transactions
After the Draw is transferred:
Navigate to Transactions.
Locate the transferred Draw.
Expand the Draw to review its transaction details.
The expanded transaction shows the funding movement associated with the Paydown, including:
The funding source providing the Paydown funds.
A Principal Payment against the receiving Debt source.
The applicable Paydown amount.
The Draw amount separately from the Paydown funding movement.
Review Paydown Balances After Transfer
After transfer, the completed Paydown is reflected in the deal's funding and principal balances. Review these values to confirm the Paydown has been applied to the appropriate sources.
After the Draw is transferred:
Funded to Date updates to reflect completed Paydown activity.
Remaining to Fund updates for the Paydown.
The receiving Debt source's Principal Balance reflects the Principal Payment.
Subsequent Draws carry forward completed Paydown activity in their Funded to Date values.
Historical Draws retain their applicable point-in-time funding values rather than reflecting Paydown activity from later Draws.
Note:
Paydowns are not included as funding sources on the Capital Stack itself. As a result, aggregate values displayed on Capital Stack and Sources & Uses may differ.
Export a Draw Package with Paydowns
The Draw Package includes Paydown activity so the exported package can represent the offset in the same financial structure as the Draw.
Open the applicable Draw.
Preview or download the Draw Package.
Review the Funding Sources section.
Confirm the Paydown is represented as a negative line item.
The Paydown and its Funding Amount appear as a negative Source, allowing the Draw Package to reflect the offset used to pay down the Debt funding source.
Benefits
Model a funding source paying down the principal balance of a Debt funding source directly on the deal.
Keep the deal balanced by representing the Paydown as a negative Source in Sources & Uses.
Record the actual funding movement within Draw Management rather than tracking it outside the platform.
See Paydown activity reflected in funding balances, Disbursements, Transactions, and Draw Package outputs.
Workflow Considerations and Limitations
Keep the following considerations in mind when configuring and executing Paydowns:
Receiving Source: The Receiving Source must be classified as Debt. Paydowns cannot be applied to Equity or Other funding sources.
Funding Source per Paydown: A Paydown supports one Funding Source.
Receiving source and Draw funding: A funding source cannot have a Funding Amount in a Draw and also be the Receiving Source of a Paydown in that same Draw. Use separate Draws for these activities.
Capital Stack totals: Paydowns are not included as funding sources on the Capital Stack. Total Funded to Date, Total Commitment Amount, and Total Remaining to Fund may therefore differ between Capital Stack and Sources & Uses.
Eligibility: Eligibility and Paydowns are not supported simultaneously on the same deal.
Sponsored Borrower: Submitting a Paydown request through the Sponsored Borrower Portal is not currently part of the Paydown workflow.