What are BSPRA and SPRA in a 221(d)(4)?

Builder and Sponsor’s Profit and Risk Allowance (BSPRA)

The BSPRA allowance is used as a credit against the mortgagor’s required equity contribution. To use BSPRA there must be an identity of interest between the mortgagor and general contractor. There is no builder profit contained in the mortgage calculation. For new construction, BSPRA is 10% of the estimated cost of on-site improvements, structures, general requirements, general overhead, architect’s fees, carrying charges and financing, legal, organizational and audit expenses, exclusive of land. For substantial rehabilitation, BSPRA is no more than 10% of the above costs exclusive of the as-is value of the existing structure.

Sponsor’s Profit and Risk Allowance (SPRA)

An amount included in replacement cost where no identity of interest exists between the general contractor and mortgagor. SPRA is no more than 10% of the total estimated cost of: architect’s fees, carrying and financing charges, legal, organizational, and audit expenses.