The pivot

Three lenders told me no in the span of a couple days. That's where I want to start, because it's the thing that changed the plan.

Here's what was happening underneath those no's. I worked a pipeline of close to twenty lenders for Cavara's first phase. A lot of them liked the project. None of them could close it. The problem was never the land or the design. It was the structure of the loan itself: a ground-up construction project at fourteen units, well above five million dollars, with one guarantor, in a lending environment that has tightened hard on exactly that kind of deal.

Lenders are pulling back on ground-up construction at that size right now. The message I kept hearing, in different words from different people, was some version of the same thing. Start smaller. Show me it works. Then come back for the rest.

So that's what we're doing.

Phase 1 is now five to six units. Three cave units, two or three treehouses. That single change drops the loan under the five million dollar threshold, and below that line a different set of doors opens. The SBA 7(a) program comes into play. Local commercial banks that cap their lending at that bracket are suddenly able to have the conversation. The deal that nobody could close at fourteen units becomes financeable at six.

I called the SBA broker to walk him through the revised scope. That was a more enjoyable phone call than the previous several.

The part I didn't expect is how much I've come to like the smaller plan on its own merits. Working out the kinks of six is a far simpler thing than working out the kinks of fourteen. Six units of foot traffic, six units of operations, six units of every small thing we haven't learned yet. That's a manageable thing to get right before we ask the land to hold more.

Because that's the real reason this feels correct, not just convenient. At this stage we don't know what we don't know. There's an entire operation here we haven't run yet. Cave units built the way I wrote about last time, glass set into openings the gorge already made. Treehouses going up in terrain that will teach us things no spreadsheet warned us about. Building the first handful, living inside the operation, learning where it bends. That earns the right to expand. Skipping that step just because a bank was willing to fund it never would have.

The land still supports everything we first imagined. The original vision didn't shrink. The path to it changed. We build the first units well, we learn the operation honestly, and the case for the rest gets stronger with every night a guest actually stays.

The reduced scope has done something I didn't see coming, too. With fewer units, every design conversation with O2 has gotten sharper. We're talking site by site now, not in bulk. Which tree. Which opening in the rock. What each individual stay should feel like to walk into.

More soon,

Jeremy