Making the decision to open your own business can be exciting. In order to ensure your success, you will need access to the right commercial property. If you are unable to find a property that meets your needs on the market, it might be beneficial to consider constructing your own retail location or warehouse.
Securing a commercial loan can provide you with the financial resources needed to build your own commercial space. Here are three tips that you can use to successfully qualify for your first commercial construction loan in the future.
1. Make sure that you pre-qualify for permanent funding.
Before you apply for a construction loan, it's important that you understand how this loan product works.
A construction loan is essentially a line of credit that you can utilize to pay for expenses throughout the construction process. You only pay interest on the balance of your loan while construction is ongoing, with the remainder being paid once construction is complete.
This means that you need to secure permanent financing that will be available to you once your commercial property has been built. Getting pre-qualified for permanent financing can help make it easier to secure a commercial construction loan.
2. Create an accurate budget.
Before applying for a commercial construction loan, you should take the time to meet with an architect and construction company. These professionals will be able to help you create the blueprint for a commercial space that will meet the needs of your new company.
The construction company will be able to provide you with an estimate regarding the cost of materials and labor required to complete construction. You can utilize this information when applying for a commercial construction loan by letting your financial representative know how much money you expect to utilize when building your new commercial property.
3. Ask your builder for recommendations.
If you are unsure where to turn when applying for a construction loan, it can be beneficial to ask your builder for recommendations. Most construction companies will have had experience working with construction loans in the past.
Since the construction company will be dealing directly with the lender of your choosing, it can be beneficial to select a financial institution that already has a working relationship with your builder. This will help to streamline the construction project and keep costs at a minimum.
Being able to secure a commercial construction loan is essential when you are thinking of building a new commercial space. Be sure that you get pre-qualified for permanent financing, that you create an accurate budget, and that your builder and lender can work well together in order to ensure that your first commercial construction loan is a success. For more information, contact companies like LCNB National Bank.Share