What is Credit Enhancement?
Lenders may be looking for the "missing piece"
In some cases very sound projects simply do not have sufficient equity. In some cases a cash injection from a third party can make the difference. Sometimes a "deep pockets" guarantor will change a rejection to an approval.
In some cases a lender may like the project and the loan package, but feel there is insufficient experience in the development group. The addition of that missing element can sometimes change a rejection to an approval
Lenders generally require some level of "pre sales" as a test of market viability. Credit Enhancement companies can sometimes bring multiple buyers forward to meet lender requirements and speed the project forward. Sometimes a delay in getting into the ground can mean the land purchase contract, or city permits can expire. Sometimes marketing and carry expenses cause the developer to run out of cash. The window of opportunity can vanish.