top of page
Broker's Header_edited.jpg

Construction Loans

What are Construction Loans?

Construction loans provide temporary financing for the construction, renovation, or expansion of commercial properties. They act as a bridge, funding your project until completion, when you can refinance into a permanent loan.

Key Loan Features:

Commercial Loan.png
  • Progress Payments: Funds are disbursed in stages (draws) based on predetermined project milestones, ensuring responsible allocation of capital.

  • Interest-Only Repayments: During construction, you'll primarily focus on interest payments, minimizing upfront financial strain.

  • Shorter Loan Terms: Construction loans typically have terms of 12-24 months, aligning with your expected construction timeline.

  • Exit Strategy: The ultimate goal is to refinance the construction loan into a long-term commercial mortgage upon project completion.

Benefits of Construction Loans

  • Finance the Entire Project: Cover all aspects of your development, including construction costs, materials, and labor expenses.

  • Flexible Payment Structure: Match funding with construction progress, avoiding unnecessary upfront costs and optimizing cash flow.

  • Improved Cash Flow Management: Preserve your working capital for ongoing business operations while financing the development project.

When to Consider a Construction Loan

  • Commercial Property Development Projects: If you're undertaking the development of a commercial property, a construction loan can be your financing solution.

  • Staged Funding Requirement: This loan structure is ideal when you need funding released in stages based on construction progress.

  • Preserve Working Capital: Construction loans help businesses maintain financial stability by minimizing upfront costs and allowing them to use working capital for ongoing operations.

How a Finance Broker Can Help

Navigating construction financing can be complex. Here's where a finance broker becomes your valuable partner:

  • Expertise in Construction Finance: Brokers possess in-depth knowledge of construction loan requirements and market trends.

  • Lender Matching: They connect you with lenders specializing in construction loans, ensuring access to competitive options.

  • Loan Structuring: Brokers work with you to tailor loan terms that align with your project timeline and budget.

  • Progress Monitoring: They collaborate with lenders and builders to ensure the draw schedule is followed and funds are released as planned.

  • Refinancing Strategy: Brokers develop a plan to seamlessly refinance your construction loan into a permanent loan upon project completion.

FAQs (Frequently Asked Questions)

  • Loan Application Documents: Typical requirements include project plans, budgets, contractor bids, and business financial statements.

  • Draw Schedule: This pre-determined plan outlines the amount of funds released at specific project milestones.

  • Extended Project Timeline: Discuss potential solutions with your lender and broker if unforeseen circumstances cause delays.

Disclaimer: This information is intended for general informational purposes only and does not constitute financial advice. Please consult with our finance brokers before making any borrowing decisions.

Ready to turn your vision into a reality? Contact our experienced brokers today to get pre-approval and to discuss your construction loan needs!

bottom of page