If you are a business owner, it is possible that you have heard of a commercial construction loan, but you may not have been told all of the details. A commercial construction loan is a loan given to business owners who want to expand their business. This can mean to take an abandoned building in the area and remodel it, or this may mean to build an entirely new facility in a completely new location. Whichever the business owner chooses, the money from the loan will be used for that purpose.
The main reason why a business owner would take out a commercial construction loan is to add value to their business. The business owner may have the desire to sell his/her business in the next 10 years, and remodeling the current facility may help him/her receive the desired offer, or the business owner may want to create more room to hire more employees and to take on more customers. In certain instances, business owners may take out this type of loan just to update their facility with a new roof, new desks, and more.
The best people to take out a commercial construction would be business owners who have been in business for several years. Being in business for several years shows that the business owner is making enough monthly sales to stay in the business world. A new business owner has the ability to take out a commercial construction loan, but a lender is going to see a new business owner as a risk. This means there will be higher interest rates and other fees. In certain instances, there may even be a down payment needed before the loan can be given.
Once the lender and the borrower come into agreement, the lender will then release the funds to the construction company working on the facility. The loan money is not give all at once. The construction company and the borrower must show proof to the lender that a certain portion of the job is complete before the funds or released. This means the full amount of the loan will be given out in several different stages. However, this is great for the business owner because the business owner does not have to start paying back the loan until it is fully disbursed.
Once the loan is fully disbursed to the construction company, the borrower must pay the loan back in full by a certain date, but the lender will make sure the borrower is satisfied with the work before the final payment is disbursed. If the borrower does not have the money to pay back the loan in full, the borrower can work with the lender to transfer the commercial construction loan into a commercial mortgage loan or a similar type of loan. This will allow the borrower to pay the loan back over a period of time in biweekly or monthly payments.
Over the years, commercial construction loans have been a success. They have allowed business owners to create wonderful buildings and thereby bring in more customers. They have also allowed business owners to create more office space in order to hire more employees. This type of loan can be distributed in less than 48 hours if all of the paperwork is filled out correctly and accurately.