Forbearance Carry Gap Calculator

Forbearance delays foreclosure but sponsor bears carry cost during the gap.

Suspended monthly payment

Forbearance months

Sponsor carry cost / mo

Accrued interest rate %

Total carry + deferred

$1,011,516

Sponsor carry

$225,000

Accrued interest on deferred

$21,516

How the math works

Deferred = suspended × months. Carry = sponsor × months. Accrued = deferred × rate × (months/24).

$85k × 9 = $765k deferred + $25k × 9 = $225k carry + $765k × 7.5% × 0.375 = $21.5k interest = $1.01M gap.

How to Use

Enter suspended monthly payment.
Enter forbearance months.
Enter sponsor carry cost / mo.
Enter accrued interest rate on deferred %.
Read total carry + deferred.

Frequently Asked Questions

What is forbearance?

Lender agrees to pause or reduce loan payments for a defined period (typically 3-12 months) to help borrower through short-term distress. Deferred amounts are typically added to loan balance (capitalization), paid as balloon at term end, or amortized over remaining term. Loan does not go into default during forbearance — credit preserved. Common during market disruptions: 2008-2010 financial crisis, 2020 COVID, and rolling rate-cycle distress 2022-2024.

Forbearance cost?

Deferred interest continues to accrue (lender doesn't give up interest — just times). Sponsor continues carrying: property taxes, insurance, utilities, maintenance. Usually sponsor must stay current on these non-debt items. Forbearance gives time but not free money. Plan sources of carry cash: reserves, partner capital calls, property cash flow if positive. Institutional forbearance negotiations include specific covenants on expense management during gap.

When do lenders grant forbearance?

When lender believes (1) sponsor has capacity to recover, (2) market disruption is temporary, (3) underlying collateral value remains intact or recovering, (4) foreclosure would yield worse result. Common in: COVID lockdowns (hospitality, retail), natural disasters (insurance lag), construction delays on completed but pre-occupied projects. Not granted when sponsor credibility is low or market recovery timeline is unclear.

How to negotiate forbearance?

Show specific reason for distress (event, not mismanagement). Show specific recovery plan with dated milestones. Bring sources of bridge capital (reserves, partner capital call commitment). Offer to personal-guarantee the forbearance amount. Propose covenants (monthly reporting, operating budget, no distributions). Lenders grant forbearance when it's clearly temporary fix — not when it's Band-Aid on structural problem. Track record and communication matter more than balance sheet.