Construction Financing?
A commercial construction loan is a form of financing that is used to construct, renovate or expand buildings intended for commercial use. This financing is often short-term, covering the project costs and intended to be repaid soon after the project is completed.
When a client intendeds to hold the property after construction, we offer financing options that automatically takeout or repayment of the construction loan with a long-term mortgage.
There are a variey of construction funding solutions. Finding the right fit depends on the project status, property type, and preferred exit strategy.
Construction vs. Purchase
For many businesses, ground-up construction makes more sense than acquisition of an existing building. Often, this is because modern framing and finishing is built around efficiencies that refurbishing older properties can’t match. Established properties also often come with significant appreciation, making them cost inefficient and difficult to repurpose.
Are you a business owner interested in building a commercial property to match your ideal specifications? Or are you a real estate investor or a commercial real estate broker struggling to find viable properties within existing stock?
In either of these situations, the right commercial construction loan can make it possible to turn your vision into reality.
Construction Loan Process
Construction loans are available for every stage in the development process, from acquisition of greenfield sites to zoning, subdividing, laying infrastructure, and ultimately building residentail and commercial properties.
Experienced developers know that they can specialize in one stage of the process, or they can participate in the full cycle of development.
Construction loans are built around each stage in the process and payment isn’t made until the phase of development has been evaluated and approved. That protects investors from a late stage discovery that the foundation isn’t solid, or that water and sewer have yet to be available.
Our experienced team will help you vet the development plan, contractors, and stages in the process to identify risks and to mitigate them prior to moving forwared with financing applications. That facilitates faster closes and fewer questions that can delay your loan.
What costs are covered by a construction loan?
The costs associated with a commercial construction project will vary depending on the size, scope, and complexity of the project. Generally, these costs can be broken down into two categories: hard costs (materials and labor) and soft costs (financing fees, taxes, permits).
Additionally, contingency funds should be budgeted in case of cost overruns or unexpected problems during the construction process. Other associated expenses may include architect’s fees for design plans; surveys to confirm property boundaries; title insurance; special inspections; contractor bonds; bonding fees for subcontractors; utility connection fees; landscape work after completion of the job to meet city regulations.
Our team works closely with each client to plan, review, and polish the budget for their construction project. Our goal is to ensure commonly unforeseen costs are covered, but that unecessary debt is avoided.
Terms, Conditions, and Rates
Terms and conditions associated with obtaining a commercial construction loan typically include:
An interest rate based on risk-based pricing models. Our rates start at prime plus 1.75%
Repayment periods ranging from the duration of the project up to 25 years or more with a conversion to permament financing
Insurance requirements in order to cover any losses incurred during the project’s completion
Other miscellaneous fees such as survey costs, environmental surveys, or legal fees, if necessary.
We make the journey from application to funding quick and easy.
1: Apply
It all starts with a short online application. Within 5 minutes you'll provide our team with all the information needed to unlock your best financing options.
2: Consultation
Our team will reach out and walk you through available options. Then we'll hold your hand through each step in the underwriting process.
3: Funding
Once underwriting is completed, the loan closes. You receive the funds deposited directly into your company's bank account.
With a little information about your business and objectives, our consultants can help you determine if construction financing is the right solution for your business.
Our team is here to help you access the capital you need to grow.
