When you don’t have the funds to work on your project, a commercial construction loan could be the right choice. These loans offer business owners fantastic benefits and can help them achieve their dream. However, if you wish to get the best terms for your commercial construction loan, it would be best to have a complete understanding of the requirements and all the critical aspects to find an ideal loan. Today, we will explain all these requirements in detail and give tips on what steps you can take to get better terms.
When you are in business, there comes a phase when you know it’s time to take active measures to grow and expand your business. You may be running your business from a rental office space and have decided to build your office. Your team may be outgrowing your current facility, and it’s time you take steps toward expansion. Whenever the realization hits you, you must take the proper steps on time to ensure your business is not affected.
Great Credit Score
Commercial construction loans come with a lot of risks. Therefore, most real estate lenders ensure proper measures to guarantee their money is safe. One of these is looking at the borrower’s credit history to check if they qualify for the loan. Since commercial construction loans are generally significant, real estate lenders look for options with lower risk and a high credit score. If you are applying for such loans, it would be best to have a credit score of 700, depending on your lender’s needs. If you need a decent credit score, our Real Estate Funding Solutions experts can tell you ways to improve it and get the loan you want.
Like most other traditional loans, commercial construction loans also require the borrower to have a low DTI ratio. Most real estate lenders prefer borrowers with a debt-to-income ratio under 40%. Ensure you speak with our team to calculate your DTI and understand things before you start applying for a loan.
Your Down Payment
The down payment the lender requires helps reduce their risk and can also lower your interest rate. In most instances, the minimum down payment for these loans is at least 10%. However, depending on the potential risk factors, it could also be 25% or 30% of your total project cost. Ensure you save significant money for your down payment before applying for a commercial construction loan to increase your approval odds and get favorable terms.
A Detailed Description of Your Construction Plan
All commercial construction loans require the borrower to submit a detailed construction plan. It means specifications, blueprints, floor plans, etc. Your labor and suppliers’ costs may also be relevant. It should also include all the phases of your project in great detail. Your builder must also be involved in your plans, at least in the final stage of preparing your loan application. The description should include your project’s start and end date to reduce any chances of future disagreement.
Because of all the uncertainties in constructing a commercial property, real estate lenders want to see as much detail about your project as possible. You can improve your chances of approval by showing the lender that your builder is licensed, insured, and qualified. It might involve submitting a copy of your builder’s resume, insurance certificates, and proof of financial stability. You can also briefly describe each party’s responsibilities, including your general contractor, architect, and anyone else involved in your project.
Commercial construction loans are a reliable way for business owners to access the funding they need to expand their businesses. But since these loans tend to come with a higher risk, you must find a suitable lender who will not create any trouble for you. Contact Real Estate Funding Solutions to find the perfect lender for you!
Real Estate Funding Solutions Can Help You Find The Perfect Terms For Your Loan!
Once you have the assistance of your Real Estate Funding Solutions team, you will not have to worry about taking the wrong decisions. Our professionals can help you get in touch with suitable lenders, ensure you keep up with the requirements, and help guide you through each step of the process. If you want to take the proper measures to support your needs to succeed in the market, call Real Estate Funding Solutions for help at 855-913-8637 today. Our professionals will be more than happy to assist.