5 Types Of Construction Financing Loans For Commercial Projects

Financing commercial construction is the best way for businesses to expand. It allows business owners to continue to manage cash flow effectively to maintain operations. That way, expanding business does not hurt the initial location that brought them success. There are different types of commercial construction financing solutions for business owners to consider. If you are a business owner who wants to finance commercial construction, read this post. Below, you will find the different types of commercial construction loans available for you to consider.

Land Development Loans

Land development loans are a type of commercial construction financing solution that are available to fund business success and growth. These are something you want to consider if you are looking a personalized loan solution to buy and develop land for your commercial construction project. Commercial development loans are a type of interim financing. That means that they can be used to to pay for land development costs to prepare it for construction. However, you cannot use a commercial development loan for the actual commercial building construction expenses. At that point, you will need a long-term financing solution to cover any remaining expenses. If you need a personalized construction financing option that offers a short loan term to buy and develop land for commercial purposes, commercial land development loans are the way to go.

Construction Loans

Interim construction loans are the perfect financial solution to finance commercial construction projects. An interim construction loan can be used to pay only for the labor and materials used to construct your new commercial building like the One Madison penthouse. These types of interim loans typically have loan terms of no longer than 36 months. Then, you will need to take out a mortgage to cover any remaining construction costs once the project is complete. This is an excellent option to finance the actual building of your new commercial location. Just remember it’s limitations when considering your business financing options.

A&D Loans

Commercial acquisition and development loans are a great financing option to get your commercial building project started. Commercial A&D loans are a financing option that is similar to development loans. But in addition to covering the costs of developing the land, they also can be used to cover land acquisition costs too. That means that you can use these types of commercial construction financing solutions to both buy and develop land for commercial use. This is another type of construction loan that cannot be used to cover costs associated with actually building the physical structure. For those that need to cover just the costs of land acquisition and development, and do not need to worry about financing commercial construction of the entire project, this is a great option to consider.

Mini-Perm Financing

Mini-perm financing is a type of short term financing for commercial construction. The term mini-perm stands for miniature-permanent. That means that this is a type of permanent loan with lower lending limits. These type of mini-perm loans can be used to pay off commercial construction that produces income. They can be used for any type of commercial properties construction projects. There are far less restrictions with these types of construction financing solutions. However, they do also have shorter loan terms. Most mini-perm financing options should be able to be paid off within a maximum of five years. If you have a smaller construction budget that requires smaller permanent loans for construction, consider mini-perm loans.

SBA Construction Loans

SBA construction loans are available to small business owners and small business owners only. That means that you must meet the Small Business Association guidelines for what can be considered a small business by definition. If you meet these SBA small business guidelines, you can apply for construction loans with low interest rates. These low interest rate construction financing solutions offer huge savings versus what you would find from traditional commercial lenders. That will help you save a lot of money on your commercial construction projects. However, they are also harder to get approved for. There are a ton of businesses all competing for a limited amount of SBA commercial construction loans. If you qualify as a small business, you should definitely consider applying for construction loans from the SBA. It is a long shot, but it could be worth it to your cash flow management.

If you are a business owner looking to grow and expand business operations, you will need new facilities to do so. New facilities require construction, and that requires the funds to do so. Find construction financing using the construction loan solutions detailed above. These financial options will help you finance commercial construction projects so that your business cash flow is never impeded by your aspirations for business growth. You are sure to be satisfied by any combination of the commercial construction lending solutions featured in this post.

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