Commercial Construction Financing What's a Best Loan Package in Construction?

Commercial Construction Financing What's a Best Loan Package in Construction?

 As a commercial mortgage broker, I converse with aspiring commercial developers daily. Often times, I am surprised by their lack of specific knowledge as to what it takes for a commercial construction project to obtain financing. This article will discuss what should be included in an excellent loan submission package for a business development project.


The last thing you want to happen to your financing proposal is to have it land on the bottom of the pile on a bank loan officer's desk. Every loan package for a commercial construction project should contain a few essential elements, or it will be ignored, or even denied.

The first element of an excellent commercial construction loan package is the executive summary. The executive summary describes the project in paragraph form, and it represents the project, location, and general strengths of the deal.

The second essential ingredient to a loan package is the detailed resumes of the project principles and the general contractor if he is not already a principle. The resume should include a comprehensive list of actual projects completed. Specific experience is a vital component of the loan package.

Pro-forma projections on the project and the net income expected is required. A detailed cost breakdown and analysis should also be included. Information on the property-demographics, absorption studies, marketing, and management plans, etc. should all be included—the more detailed the report, the better.

A personal financial statement for all partners, the general contractor, and all business partners for the last three years is required.

Information should be provided on all pre-sales along with proof of the pre-sales. Banks and lenders like to see at least 50% of the project pre-sold.

The three most essential ingredients in a commercial development loan are money, experience, and pre-sales. You need to have 2 of the 3 to have a shot. You need all 3 to be assured.

Most of these deals fall down in the financials and the pre-sales. And upon digging, often lack of experience shows up as well. The minimum you need to get a quote is the executive summary and the Pro-forma. The rest is required to submit.

If you are new to investing in commercial apartment buildings, I highly recommend you read my e-course, This course not only gives you all of the in-depth information that you need to purchase your first apartment building, but it also gives you all of the interactive forms that you will need to figure out the cash flow and expenses. This course will actually teach you exactly how to determine if your apartment building will be a profitable investment. You will also get access to the names and phone numbers of 25 banks nationwide who specialize in commercial lending on apartment buildings.

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