The Working Capital Escrow is required on all new construction and substantial rehabilitation loans and is designed to cover the cost of initial marketing and rent-up, FF&E (not paid from loan proceeds), project operating expenses that are not covered by project income or the initial operating deficit escrow in the first operating year, shortfalls in interest, taxes and property insurance above the amounts capitalized in the mortgage. A portion of the escrow may also be used as construction contingency to pay for cost overruns, HUD-approved change orders and other miscellaneous expenses which are not included in the mortgage and are required for new construction and substantial rehabilitation proposals.