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We Provide Commercial Construction Loans Nationwide

Commercial construction loans are the best way for a business owner like you to get your commercial real estate construction project funded and underway. But understanding what commercial construction loans are and how they work isn’t always a given. When should you get a construction loan? What do commercial construction loans cover, and what don’t they cover?

We’re here to answer all of your questions about commercial construction financing, with our definitive guide to the ins and outs of commercial construction loans.

Already know that you need a loan of this type? Contact us today to begin the fast and easy process to getting approved for a commercial construction loan with the help of Clopton Capital.

Wondering how to finance a hotel project or how to finance buying a hotel? You’ll find more information on these topics and others on our other pages.

commercial construction loans

Commercial Construction Loans Program Details

We are able to offer construction financing for commercial property nationwide from $3 million up to $50 million +

Typically our maximum loan to cost is 85% lTC with a 1st lien position, however we can sometimes go higher by layering in mezz or pref.

We can offer construction loan terms up to 36 months, with a mini perm or extension options.

Interest payments are typically reserved upfront and there is no amortization during the construction period.

Most of our deals are non-recourse with a completion guarantee only, however sometimes we need recourse to get a deal done depending on the profile of the deal.

We are able to look at construction financing across the entire country.

We can look at any type of construction project.

We can look at construction financing for every type of commercial property.

What is a commercial construction loan?

A commercial construction loan is a short-term financing option that allows you to begin building your commercial real estate project. These loans allow for the up-front purchase of land and the costs of constructing a property. Commercial construction lending can also be acquired to renovate an existing property. 

The funds acquired through a commercial construction loan are used to pay for labor, materials, land, and other assets associated with construction and renovation.

Why get a commercial construction loan?

If you’re looking to purchase an existing property, then you’ll likely get a commercial mortgage loan. Like a home mortgage loan, these loans are long-term loans designed specifically for existing properties.

But if you’re looking to construct an all-new commercial space or renovate an existing one, a commercial construction loan is what you’ll need. Because construction in commercial space is so expensive, with costs ranging from hundreds of thousands to even several million dollars, coming up with the cash to finance those projects can be difficult or impossible for many businesses. That’s where a commercial construction loan comes in.

Types of Commercial Construction Loans

While it is a category of financing of its own, it can be further divided into a few subcategories depending on your situation and the type of loan you’re seeking. Here are some of the most common commercial construction loan types and some details about each one. 

SBA Loan Programs

The Small Business Administration (SBA) is a government organization designed to help small businesses and small business owners acquire the financing and support they need to excel. One of the ways they do this is by offering SBA loans for a range of applications, including commercial construction.

In order to receive an SBA loan, you have to meet some certain criteria. To be eligible, you must:

  • Operate as a for-profit company in the United States or its territories
  • Have a net worth of less than $15 million
  • Have an average net income of less than $5 million after federal income taxes for the two years preceding your application

Other standards for eligibility are considered on a case-by-case basis based on the SBA’s regulations.

Mezzanine Loans

Mezzanine loans are designed to bridge the gap when an initial layer of financing doesn’t get the job done. Mezzanine construction loans are becoming more common, particularly when it comes to non-recourse construction debt. 

If you have questions about the details of mezzanine financing for construction projects or other projects, talk to one of our dedicated advisors who will help you on your way to acquiring the financing you need to complete your construction project and turn it into a profitable, effective part of your business.

Bank Loans

The most traditional way to obtain commercial construction financing is through a bank or financial institution. These loans will have the most industry-standard rates and terms, and the underwriting process tends to be straightforward.

The terms, collateral requirements, and fees associated with a bank loan for commercial construction financing can vary widely from case to case. Sometimes, funds will be released incrementally at various milestones in the construction process. If you work with Clopton Capital to acquire commercial construction financing, we’ll always keep you informed on the specific terms available from various lenders and financial institutions.

commercial construction financing

How do commercial construction loans work?

A commercial construction loan begins with the developer submitting a loan request for approval with a specific lender. 

In some cases, both short term financing for the initiation of the project and long-term financing for ongoing operation of the property can be combined into one loan. In other cases, they’ll be kept separate.

Once a loan request is submitted, it’s time to begin the underwriting process. This is where the requirements for obtaining a commercial construction loan will come into play in determining whether you’re able to obtain the financing you need.

What are the requirements for a commercial construction loan?

The requirements for a commercial construction loan can vary based on the amount of funding required, the lender, and the borrower’s financial status— as well as the details of the project itself.

Generally, there are some basic terms that tend to be standard across the industry. 

  • A down payment of 10% or more is usually required
  • Repayment terms are limited to 25 years or less
  • Fixed or variable rates are available on a case-by-case basis

Borrower Requirements: How Commercial Lenders Evaluate Eligibility

So how does a lender determine whether you’re eligible for a commercial construction loan?

Of course, one of the primary ways that lenders assess eligibility is individual and business credit rating and history. The best credit scores will enjoy lower interest rates, which tend to fall between 4% and 12%. 

Usually, banks will provide lower interest rates than hard money lenders— but again, this depends on your credit score and overall eligibility.

If your credit history is less than ideal, you may be required to make a larger down-payment before being approved for the best construction loan for your needs.

How long can you finance a commercial building?

Generally, construction financing can be extended for a maximum of 25 years or less. If you have questions about specific lenders and how long you can finance a commercial building, our lending experts at Clopton Capital will be happy to answer any and all questions.

What are the interest rates?

Commercial construction loan rates, including those from hotel financing companies, generally tend to range from 4% to 12%, depending on a number of factors including the market, your credit history, the project, and the lender. You can generally expect your commercial construction loan interest rates to fall somewhere within that range, with lower rates going to those with the best credit scores or those who are able to make larger down-payments. For more up-to-date information about commercial construction loan interest rates, talk to the most trusted financing partner today.

What are the fees/terms?

Depending on the land development and location, we can offer several options for construction lending, refinancing and loan term options.

  • Conventional (bank/credit union)
  • Private debt
  • HUD (multifamily)
  • SBA
  • USDA

Typically, loan terms for construction & development are:

  • Up to 75% LTV ratio on commercial loans (including hotel commercial loans, motel loans, and general motel financing) (85% with mezzanine or pref.)
  • Up to 36 months loan term
  • With provisions to roll into a permanent commercial mortgage
  • Non-recourse construction loans available on business loans
  • Structured finance amount from $5 million
  • Fixed rate

What percent do you have to put down for a construction loan?

You will usually have to put down between 10% and 30% of the total cost of the project before a lender will agree to finance the remainder. Where in that percentage your specific downpayment will fall can depend on a number of factors, similar to your interest rate— credit history, lender, project type, amount of funding required, etc.

When you work with Clopton Capital, we’ll discuss your ability to manage a downpayment and what kinds of commercial construction loans will be available to you based on that downpayment amount.

How to Get a Commercial Construction Loan

The best way to get a commercial construction loan with terms that are beneficial to you is by working with a commercial mortgage broker like Clopton Capital. With our extensive network of lenders with whom we have close relationships, we’ll determine the best possible options based on your unique situation and goals. Then, we’ll help you navigate the process of going from initial application to getting the funds you need so that you can begin construction or complete your project.

How do you qualify (and apply) for a commercial construction loan?

The best way to qualify for a commercial construction loan is by making smart financial decisions, maintaining a great credit score and not going into too much other debt, especially revolving debt. 

When it comes time to apply, it’s as simple as contacting a lender (or letting a qualified broker contact multiple lenders to get you the best terms) and beginning the process of submitting documentation.

First Steps Toward Construction Financing

If you’re eager to find a commercial construction loan that’s beneficial to you but don’t know where to start, you’ve come to the right place. For many successful businesses who have acquired the perfect construction loans with the best possible terms, the first step has been working with an experienced commercial mortgage broker like Clopton Capital.
commercial construction lending

Get Your Commercial Construction Loan with Clopton Capital

Our expert team of loan specialists has the skills and relationships necessary, as well as the ability to listen and understand your needs, so that you can get the commercial construction loan that will set you on a path to massive success and profitability. 

The period before starting construction is exciting– you have a vision for your future commercial project that you can see as clearly as if it were already here. But you don’t want to get bogged down in a frustrating process of trying to get financing to make that project a reality. Working with an experienced broker like us ensures that the process is fast, smooth, and results in you getting the best possible terms for your construction loan. The best part? We service the full range of commercial projects when it comes to construction loan financing.

Our Construction Loan Menu

Below are the property types that we consider for commercial & development loans when setting you up with construction loan support.

  • Multifamily
  • Office
  • Retail
  • Industrial
  • Self Storage
  • Hotels
  • Mobile Home Parks
  • Mixed Use
  • Owner Occupied

Real Client Case Studies from Clopton Capital

Chicago Apartment Building Project

A borrower structured in a partnership arrangement came to us looking to build a $5 million apartment building in a small suburb outside of Chicago and required working capital or lines of credit. The borrower was a local developer with a strong investor following that was supplying much of the capital for the deal. We were able to structure a 75% LTC construction loan based on the borrower’s deposit and a 3-year mini-perm. This gave the developer the flexibility to qualify, construct and stabilize the project and allowed enough time to either sell or recapitalize it. The business construction loan’s high LTC and low fees with special terms are a reflective example of how different formats of lending can be harnessed to meet your funding needs. It is a primary benefit derived in dealing with a comprehensive service mortgage broker with close lender connections.

New Jersey Hotel Construction

A hotel developer investing through a single-purpose LLC in New Jersey wanted to construct a hotel in New Jersey with a $15 million property value. The borrower needed a non-recourse construction loan for the large investor group functioning as the majority shareholder that had been assembled to complete the project, and which had no intention of signing personally. We located a lender through our connections built up over many years willing to structure a 24-month private construction loan at 75% LTC without personal recourse to any investor. The loan allowed for an extension of time, giving the developer the latitude to complete and stabilize the project. Clopton Capital’s stellar credentials helped negotiate this flexibility in an environment where most commercial construction mortgage companies are reluctant to offer such generous leeway.

Low Rate, Non-Recourse Property Loan for Apartment Development

Here the borrower, an estate, was zoning in on a $31 million apartment building in Chicago. The borrower demands were “on the edge of possibility” to say the least: relatively high leverage, low rate, and non-recourse property loan with a manageable loan payment. He was more than happy when we were able to structure an 85% loan-to-value, non-recourse, low-rate construction loan that rolled to a 40 year fixed, 40-year amortization permanent loan upon completion and stabilization.

Conclusion

Clopton Capital is a nationwide commercial mortgage broker with online services designed to help Private investors, small/middle market real estate entities, and family offices everywhere in the US secure Commercial construction loans for Industrial, commercial, and mixed-use real estate developments. We have high rate responsiveness and close relationships with the most important commercial property construction lenders in the market and we warrant direct access to them as the shortest, most effective route to closing a deal for you. New construction is not the only type we deal with: we can demonstrate a proven capability to also fund projects that have overshot budget or are distressed, right to the point of completion. Talking more specifically, we are adept at finding an asset-backed financing solution for every construction scenario you can conceive of, be it ground-up or even partial builds and renovations.

Once Clopton has completed its due diligence and we are ready to underwrite your real estate construction project, our experienced mortgage brokers have an array of lending solutions at their fingertips. These include commercial mortgages, hotel bridge financing, mezzanine financing, preferred equity, and real estate private equity – many of which can be applied to construction arrangements depending on the circumstances. For example, we are one of the leading commercial loan facilitators in the refinancing arena, a business loan activity with benefits that suit construction financing in many ways.

If this resonates with you, contacting us is easy. Start your loan application by calling us today at 866-647-1650 to speak directly to a Clopton Capital Loan Officer or simply fill out the “Contact us” form. Either way, you will soon be on the road to quickly and precisely knowing your options in line with your financial needs.

Contact Us - 866-647-1650