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Commercial Construction Loan Requirements

Did you know that, according to the Associated General Contractors of America, the construction industry includes over 700,000 employers and more than seven million employees? Additionally, this industry creates structures that are worth a total of $1.4 trillion each year.

If you’re one of the many people working in this industry, one of the things you might be wondering about is construction loan requirements.

Have a great project in mind, but you don’t know what you need to get a commercial construction loan? This can be stressful.

Fortunately, in this article, we’ll review what requirements you need to meet to get one of these loans. Finally, you can get the loan you need and start your new construction project. Read on to learn more.

Good Credit And Other Construction Loan Requirements

When a lender is considering whether or not to give you a loan for your commercial construction project, they’ll check whether you have good credit and credit history. They’ll do this both in regards to yours, personally, as well as your business’s credit and credit history.

Generally, it’s best to have a credit score that’s in the high 600s.

They’ll also take a look at your debt-to-income ratio, or DTI. This should be 40 percent or a lower percentage.

Additionally, they’ll review your DSCR. This should be a number that’s higher than 1.25.

Interested in learning more about loans or in getting one? Check out getbuilt.com.

Finances And Business Experience

Whether you’re looking for funding to construct an apartment building, multi-family home, or another type of commercial construction structure, a potential lender might want to take a closer look at your finances so they can learn about where you are financially when you apply for the loan.

Some lenders will also want to take a look at your profit/loss statement that’s current and your income tax returns.

Additionally, they might want to learn more about your business experience. After all, if you’ve been running a successful business for a long time, this will be impressive to lenders.

Additional Requirements

Sometimes, lenders will expect you to have a qualified builder already hired for the project. Additionally, they might want to see a description that’s detailed of the construction plan. They might also require that an appraiser provide an appraisal.

Additionally, you might have to provide a downpayment for your loan.

Want To Learn More About Construction Loans And Construction Loan Requirements?

Now that you’ve learned about construction loan requirements, you might want to learn more about these requirements or about this type of loan. Maybe you want to get more information about how short-term financing works or you want to learn about what steps to take when applying for a loan.

Whatever information you need, you can find it on our website. Simply go to the Business section of our blog, where you can learn more about these loans.

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