What To Expect When You Apply For A Constuction Loan
When you have an idea for a commercial construction project, the first thing you need to consider is securing a loan. You also need to have an idea of how much you will need to get your project underway. After you have done some research on your cost figures, it is time to start seeking out a lender. The following are some things you will need to expect when getting a commercial construction loan:
Approach a Lender
The first step in financing your construction project is to choose a lender. It is best to use a lender that is near your location rather than out of state. Commercial lending is different than home or personal lending in that they are much riskier. You stand a better chance of getting an approval from a local lender as they will be familiar with the market you are considering for your project.
Go Through a Lender Review
Before a lender will consider your project, they may ask you to go through a lender review. This is not a time when you will need to have all of your detailed financial statements and a detailed project plan. This is just a time to go over the general details of your idea. The lender is looking for your vision and basic outline of what you wish to build. You should have some basic figures on hand, such as how much you anticipate it to cost, the history of the developers, and summary projections. If they like what they hear, the underwriting process will begin. This is the point where they will begin requesting more detailed financial and personal information.
Involve Your Lawyer
If you have not already done so, involve your attorney at this point. You will best benefit from using a lawyer that is proficient in commercial lending. He or she will be able to guide you through the process of satisfying the loan requirements. They will help in closing the loan and serve as your eyes and ears during the lending process.
Finalizing the Loan
Once you have received a commitment letter to move forward with your loan, you will need to go through the closing checklist. This list will detail all of the documents you will need for closing, some of which include a title search of the property, a lien search of the borrowers, proof of insurance and the like. Once all of the details of the loan is finalized, the funds will be dispersed and you will be able to move forward with your project.