When you’re trying to work on a commercial property, you may need to sign a construction contract and get a construction loan. These loans are unique, and you do need to make sure that they are written to your benefit.
It is rare for a property to be exactly what you’re looking for. That’s why it’s nice to have a budget to work on the property and to bring the property up to your standards. If you’re building from scratch, construction loans may cover all of the costs associated with a new build, too.
Construction loans help you complete renovations
Construction loans are usually short-term loans, but they don’t have to be. These may cover the cost of major repairs or developments. There are several kinds of commercial construction loans, such as:
- Land development loans
- New construction loans
- Bridge loans
- Acquisition and development loans
- Takeout loans
- Mezzanine loans
- Mini-perm loans
These and other kinds of commercial construction loans are designed to help you complete your project with the goal of a finished, quality space.
What will you need to get a construction loan?
If you want to get a construction loan, you may need to provide:
- The background information for your development team
- Your projects current state of completion
- The local market conditions
- Your budget
The entire project will be reviewed before a loan officer can decide if it will offer a loan. The lender may look at things like the loan-to-cost ratio and net worth to loan-size ratio to decide if providing the loan is in the company’s best interests.
Once you get the loan contract, make sure you review it carefully. The terms of these arrangements are specific, so you need to pay them back on time and within the requirements of the contract.