Construct a new commercial building
A plain-English guide to commercial construction loans.
85%
The loan is generally 85% of cost
75%
Or 75% loan to value
3 years
Of personal and business tax returns to have ready for the bank
Construction loans, explained
Securing a commercial construction loan for various types of commercial real estate can be a difficult process to navigate. This will shed some light on commercial construction loans and demystify the lending process.
Financing options available
Helpful attachments
Commercial Construction Lending OverviewEverything you need to know about the construction loan process.Construction ChecklistThis Excel sheet will help you determine budget, full checklist of items and description of materials.Construction Budget TemplateA formal budget template for your construction project.Commercial Description of MaterialsThis form is needed to order an appraisal to determine the constructed building’s future value.
Helpful resources and links
Helpful resources
- CBA – Commercial Multiple Listing Service
- Budgeting and Cost Estimating for Construction Projects
- Important Documents for Commercial Construction Projects
Helpful links
FAQ
How much do I need to have down for a project?
- The loan is generally 85% of cost or 75% loan to value
- Your down payment can come from cash or land already purchased.
- Project equity could come from a separate piece of real estate that isn’t involved in the construction project.
- Any pre-paid soft costs (architectural, engineering, financing, and legal fees, and other pre-construction expenses) can be included as equity.
What do I need to have ready for the bank to start such a project?
- Last 3 years’ Personal Tax Returns
- Last 3 years’ Business Tax Returns (Of any business owned by the guarantors over 20%)
- Personal Financial Statement (Of any business owned by the guarantors over 20%)
- (If Owner-Occupied Business) Last 3 years Business Tax Returns
- (If Owner-Occupied Business) Interim year to date Income Statement & Balance sheet dated within 30 days
- Building Plans and specifications
- Copy of construction budget provided by general contractor OR borrower
- Sample of Contractor Contract
- Description of Materials form