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Refi Gap Calculator

Refi gap = existing loan balance − new loan proceeds. This calculator structures sources to close the gap: equity, mezz, pref equity, or partial DPO.

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Residual gap after sources

$200,000

Gross gap (loans only)

$900,000

Sources applied

$700,000

How the math works

Refi gap = current balance − new loan. Close it with new equity, mezz, or pref. Residual = the problem that requires creative solutions.

Lenders will negotiate a modification or short payoff when sponsor demonstrates good-faith sources plan. Walking in with an empty plan accelerates default.

How to Use

  1. Enter current loan balance.
  2. Enter new loan proceeds.
  3. Enter available sources (equity, mezz, pref).
  4. Read remaining gap.

Frequently Asked Questions

Typical gap size?

In rising-rate environments, 15-30% of current balance is common. Sponsors with 15% gap and no plan drift into distress; those with mezz or pref lined up close cleanly.

Order of sources?

Cheapest to most expensive: fresh LP equity → mezz (12-16%) → pref equity (10-15%) → rescue capital (18-25%) → DPO with lender. Never use the most expensive first.

Is cash call worth it?

Depends on IRR trajectory. If post-cash-call IRR still hits LP hurdle, capital call is fine. Negative IRR = LP will resist, sponsor may face removal.

When does a lender negotiate vs foreclose?

Lenders calculate their net recovery from foreclosure (asset value minus legal, time, and sale costs) and compare to any workout proposal. If your offer nets the lender more than foreclosure, and you present it with clear sources of capital, most lenders will engage. Bring a credible sponsor, documented sources, and a timeline — vague asks get declined. Build the relationship before distress, not after.

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