The success of a construction project relies on funding. Suppliers need to be paid; systems need to be implemented. Construction finance can be the best solution to meet these demands. Call L3 Funding today for construction and development loans to get your project underway.
Purchasing an existing house will typically require a traditional mortgage. Whereas, there are different loan systems required to pay for new construction or to repair existing builds. For example, breaking ground for a new space may cause you to look into commercial construction loans.
L3 offers construction business loans to developers and contractors needing funds to develop a new building or make significant renovations to current commercial or residential spaces. Commercial contractor financing is another form of a short-term loan, issued with the intent to finance the construction or meaningful restoration of a business or commercial property.
Whether it is a construction loan for commercial building projects or you’re a new home buyer, this line of credit is designed to finance all of your construction-related expenditures.
A commercial building construction loan is usually issued to developers and contractors. However, a small business owner or an individual looking to build a home from the ground up can also benefit from construction financing, too.
In fact, if you’re a home buyer who has already purchased the land, any equity that you’ve currently accrued can be used towards the down payment of a construction finance loan. You also have the added benefit of converting the construction loan into a standard mortgage once the project and the loan terms are complete.
During the course of the project, you’ll have to make payments according to the specified commercial construction loan rates.
Plus, it is important to know, construction loans are unlike personal loans. Personal loans grant you a lump sum that must be repaid in fixed increments over a specific amount of time. Whereas, construction financing is more similar to a line of credit or a credit card. Meaning, you may borrow up to your credit limit. Pay off your debt. Then borrow again whenever you need.
The credit can be used towards employee onboarding, material, and equipment used during the construction of the building, as well.
There are several types of construction finance options. At L3 Funding, we can help you determine which is best for your new project.
Construction-to-permanent loan: By seeking a construction-to-permanent loan, you will be issued the amount necessary to build the new site as well as the permanent mortgage (also known as an end-loan). This type of loan allows you to reduce the overall fees accrued when converting from a construction loan to a traditional mortgage because there is a one-time closing. Otherwise, you run the risk of paying duplicate fees.
Construction-only loan: A construction-only loan is designed to give you a line of credit to solely cover construction costs. As the building owner, you are responsible for paying off the loan in full by the time of its maturity. Otherwise, you may need to seek additional financing.
This loan was designed to keep contractors from exceeding their budgets. Therefore, unlike a line of credit that you can continually draw from, you are granted one lump sum evenly issued throughout the various stages of development.
While you benefit from only needing to pay interest on the credit you’ve withdrawn, a construction-only loan may be more costly. This is especially true if you need to draw up a permanent mortgage once work is complete, as you may have to pay closing costs and additional fees twice.
Renovation loan: Renovation loans are established to upgrade or modernize an existing building as opposed to building a new one. Renovation loans can be written into various forms, e.g. line of credit or a lump sum, depending on the amount borrowed. The drawback of a renovation loan is that your project will first need to be assessed by an evaluator, and you will need to organize your spending accordingly.
Owner-builder construction loan: An owner-builder construction finance loan is similar to a construction-only loan aside from the fact that the borrower is also the developer. This type of construction loan can be difficult to obtain, as constructing a new dwelling is a complex ordeal. Many issuers will only extend an owner-builder loan if the borrower is also a licensed builder.
At L3 Funding, we make applying for a construction loan simple and quick. Our process doesn’t require stressful paperwork or long waiting periods to hear if you’ve been approved. Learn how to get a construction loan fast.
Apply online today!