Construction Loans
What is a Construction Loan?
Commercial construction loans help businesses finance the construction or renovation of commercial properties, such as offices or retail spaces. These loans cover costs like land, materials, labor, and permits necessary for completing the project.
Nationwide Construction Financing Solutions
Short-term construction loans are designed to support development projects by covering construction and development costs. These loans are disbursed either as needed or according to a prearranged schedule, with repayment typically occurring once permanent financing is in place. They can be used for both new facility construction and the renovation of existing properties. With flexible repayment terms, these loans provide a practical financing solution for businesses looking to move forward with their development plans.
Terms and Rates for Construction Loans
Typically lasting 1 to 3 years, development financing supports land development, covering construction, excavation, and infrastructure work. Depending on the project, financial strength, and experience of the developer; Loan to Cost can be up to 80% of acquisition/infrastructure costs and 100% of construction costs depending on the appraised value of the completed project and the real estate developer’s overall experience. These loans, with up to 75% Loan to Value (in limited cases this can be a higher loan to value), require the property as collateral until it is sold or support permanent financing.
Construction Loan Underwriting
Underwriting for construction loans focuses on the real estate proforma and the economics of the individual project. Unlike permanent or investment real estate loans, most construction projects lack a property history. Consequently, the underwriting process omits these numbers during evaluation. Throughout placement, underwriting, and approval, we specifically concentrate on a detailed breakdown of the construction budget, the local real estate market, the building and investment team’s experience, proforma, the investor’s financial situation, and any associated project risks. Documentation typically includes tax returns, proforma, project plans, cost estimates, financial statements, and other construction financing details.