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All You Need to Know About Commercial Construction Loans



A commercial construction loan is an amount of money sanctioned to an investor or a company that is planning to construct a new commercial building.

These constructions include malls, shopping centers, office complexes, residential apartments and multi-family commercial properties.

Since constructions take time, these loans are generally given for long-term; however, they can also be designed for short-term, depending on the needs of the project.

Who offers Commercial Construction Loans?

Commercial construction loans are offered by banks, financial institutions, insurance companies and commercial hard money lenders who specialize in real estate.

Lenders usually have extensive knowledge about real estate, and conduct a thorough assessment of the land before issuing a loan. Giving out a construction loan is risky, as it is being offered for a building that will exist somewhere in the future.

Therefore, small companies and investors may find it hard to obtain a commercial construction loan from a bank or a financial institution, which is why their best option is a commercial lender.

Types of Commercial Construction Loans

There are several types of commercial construction loans that are offered to investors. These include:

Acquisition and Development Loan

As the name suggests, this loan is obtained to acquire a land and make it construction-ready. The loan amount covers the purchase price of the land and the renovations cost associated withit.

Land Development Loan

In several cases, companies and investors already have a raw piece of land that they are willing to start construction on.For this, a land development loan can be obtained to develop the land and upgrade its infrastructure.

Factors like sewerage system, power lines and water lines can be installed with this type of loan.

Interim Construction Loan

Interim construction loans are obtained by investors who run out of funds midway into construction. The loan covers material and labor cost for the construction to continue.

Mini Perm Loan

This loan is offered to the investors in the final stages of the construction activity. This can only be obtained by investors working on a commercial project rather than a residential building.

Takeout Loan

A takeout loan is a permanent form of financing, which should ideally be applied forat the initial stages of the project, if the investor or company is depending on financing from the start. Some commercial lenders make this a pre-requisite for obtaining other loans.

If you are an investor looking for commercial construction loans with fast approval and flexible terms, get in touch with GCP Fund. They are one of the leading commercial lenders in the country and provide all types of commercial construction loans.