1. Loan Purpose: Funds the construction of commercial properties such as:

• Office buildings
• Retail centers
• Industrial facilities
• Multi-family apartments
• Mixed-use developments
• Hospitality projects (hotels, resorts, etc.)

1. Loan Amount – Typically ranges from $10 million to $100 million+, depending on the project’s scope.
2. Loan-to-Cost (LTC) Ratio – Up to 75%-85% of total project costs.
3. Loan-to-Value (LTV) Ratio – Typically up to 65%-75% of the completed property value.
4. Interest Rates – Typically 8%-12%+ for private lenders, with rates varying based on the borrower’s credit profile, project risk, and lender type.
5. Loan Term – Usually 12 to 36 months, with possible extensions
6. Repayment Structure – Usually interest-only during construction, with a balloon payment due at loan maturity.
7. Exit Strategy – Borrowers must have a solid exit strategy, such as refinancing into a permanent loan or selling the completed project. Stabilizing the property with tenants may be required for refinancing.
8. Disbursement Schedule – Funds are released in stages (draws) based on construction progress. Understand inspection requirements and ensure a smooth draw request process.
9. Recourse vs. Non-Recourse – Loans may be recourse (personal guarantee required) or non-recourse (limited to the property itself).
10. Contingency Reserves – Construction projects often face delays and cost overruns. Having at least 5%-10% of the budget in reserves can prevent financial strain.
11. Project Feasibility & Planning – Conduct a market feasibility study to determine demand, pricing, and competition. Ensure detailed construction plans, timelines, and budgets are in place. Assess zoning laws and permits to avoid legal issues.
12. Down Payment & Equity Contribution –Borrowers typically need to contribute 20%-30% of the total project cost. Ensure you have enough liquidity to cover upfront costs and contingencies.

Qualification Requirements:

• Experience – Developers with prior construction experience are preferred. If you lack experience, having a qualified general contractor can help secure approval.
• Financial Strength – Strong borrower financials and liquidity are crucial.
• Project Feasibility – A well-defined construction plan, timeline, and market analysis.
• Contractor & Team – A qualified general contractor and construction team.