Set up in 2015, Breckland Bridge won an award for its development of Thetford’s Riverside Leisure Complex.
But the report for the council’s Conservative-run cabinet, external said its most recent project, a 21-home estate in Colkirk, near Fakenham, had suffered long delays.
The development was due to be completed by 2022 but has remained unfinished since the original construction firm collapsed into liquidation shortly after work began.
Although a new contractor has completed the first homes, the project is still ongoing and is forecast to lose £288,000.
The Local Democracy Reporting Service said Breckland Bridge owed a total of £515,455.
Almost £464,000 – including interest – is due to the council while the rest is owed to Land Group, which is a partner in the business.
The council has said writing off the loan would help Breckland Bridge move towards a new business model, focused on selling land to developers rather than building homes directly.
Projects in the pipeline over the next five years include sites in Litcham, Banham and Kenninghall.