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Commercial Construction | How to Get Your Commercial Construction Loan Financed  

Commercial construction loans can be hard to come by. In today’s commercial real estate market, lenders try to find the investments that are generally lower risk, and any construction projects – whether it’s renovation on an existing building or developing a building on already purchased land, commercial construction projects are considered high risk because the effects of the construction are unproven.

That means it can be difficult to find commercial construction lending, also known as “ADC Loans” (Acquisition, Development, Construction). But commercial construction loans do exist, and when you find the lenders you need to be prepared for what they may ask you.

Feasibility, Developer Information, and Budget

While there are dozens of different factors that go into commercial construction lending, there are three primary sources of information that lenders will look at:

  • Project Feasibility – Lenders will look at the likelihood that the project is going to turn into a profit. While you will need to prove your profitability with commissioned studies, expect the lender will also do research on their own.
  • Developer/Borrower – Lenders will also look thoroughly at who you are as a borrower. They will be seeing if you have a history that indicates development will be successful, and also see if the contractors that you’ve hired have a history of completing projects on time and budget.
  • Budget – Lenders will also be looking at the proposed budget and its likelihood of turning into a reality. They’ll look at hard costs, soft costs, and whether there will be a contingency fund available after the money has been lent.

Remember that a construction project is just that – a project. Lenders that fund commercial construction do not yet have collateral/assets that can be seized if the loan isn’t successful. For example, if the project is left unfinished, lenders have nothing to seize to recoup their loan. So careful attention to detail and excellent planning is crucial to obtaining one of these loans.

Searching for Your Lender with CRE Lender

CRE Lender has helped dozens of investors find the funding they need for their commercial construction projects. We recognize how difficult it can be to find funding – especially in today’s economy – which is why we have developed a rolodex of construction lenders and a team of experts that can correctly analyze your loan needs and submit them to the appropriate parties.

Find out more about CRE Lender and find the construction financing you need by signing up with CRE Lender today.

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