Ground up construction projects are no small feat. Everything from blueprints to contractors, subcontractors, supplies, specialized equipment, and more can run into a large upfront cash outlay, plus additional costs further on down the line, as stages of the project cycle come to completion. Frequently, traditional bank loans can take a long time to process and approve, which can leave a project racking up expenses with nothing getting done until the funds are made available. Fortunately, there are various construction financing programs available to bypass this waiting period and get right to work.
Bridge loans are great construction financing solutions when you need to act quickly and are waiting for larger financing to become available. Bridge loans can cover any gaps in funding, and can be used to cover upfront costs on permits, equipment and construction without having to resort to traditional bank loans. Bridge loans offer high loan to cost rates, and can be had for amounts starting at around $7 million.
SBA 504 Loans
The Small Business Administration (SBA) 504 Loan Program is structured specifically around ground up construction projects up to $25 million. These programs can offer up to 90% loan to cost, and can even be used for specialty properties, such as self storage, hotels, and more. There are even added incentives and extras that can be added on if it is an environmentally (green) construction project. While SBA Loans can usually take time to process, commercial finance professionals can get the loan application fast tracked for approval, so your construction project can get off the ground as soon as possible.
Construction Financing for Large Projects
Large project construction financing is designated for those undertakings costing $50 million and up. This type of funding usually uses a combination of debt and equity, or mezzanine financing, and offer up to 85% loan to cost (sometimes higher for multifamily rental projects). Construction financing for large ground up projects offer aggressive financing, and the agreements can be structured around the various stages of the plan to spread out the overall cost into manageable payments with flexible terms.
Rather can going through traditional lending sources, such as banks, and having to deal with red tape, strict lending guidelines, and bottom line oriented terms, commercial construction financing offers tailored solutions. Construction financing consists of a wide array of options to see your ground up project to completion.