When it comes to turning your business plan into a reality, you have many financing options. A commercial construction loan can help you fund an initial build out for your business, add on space for expansion, or even an additional location.
Commercial Construction Loan Types
Commercial construction loans are short-term loans specifically designed to cover the costs of construction for a new or expanding business. Depending on your needs, there are various types of loans available to you.
If your business qualifies for a loan backed by the Small Business Administration, you may choose to apply for either of the following:
- SBA 7a loans can fund any legitimate business purpose, including construction.
- SBA 504 loans allow small to mid-size businesses to build an “owner-occupied” commercial property from the ground up or to expand an existing facility.
Mid to large-sized businesses can apply for a commercial construction loan from any bank. It is important to note that community banks, such as Peoples Bank, offer a much better understanding of local market conditions than larger, out of area institutions.
When applying for a commercial construction loan, lenders expect you to present detailed information to make your case. You will be asked to provide a business plan, complete with earnings projections. This data will show your lender that you have an understanding of the local market and provide a timeline for loan repayment.
If you are a new business, be prepared to supply personal financial information, such as a strong credit score. For existing businesses, lenders will request accounting and tax information. Be prepared to demonstrate your organization’s need for growth.
Finally, you will need to present cost information related to your construction project. Lenders will need to review multiple construction estimates to justify your loan request.
Once you submit your application and supporting documents, a loan officer will review your application thoroughly to evaluate the security of the loan. If your application is approved, they will provide you with the terms and interest rates for the loan. Upon acceptance, you are free to move forward growing your business.
The professional loan officers at Peoples Bank are here to help you find out how a commercial construction loan can fit into your developing business plans. We have many years of experience helping our local community build and grow businesses, with traditional bank loans and as an SBA preferred lender. We look forward to helping you and your business reach your greatest potential – visit us today!
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