What Do Banks Like To See When Asking For A Commercial Construction Loan?

What Do Banks Like To See When Asking For A Commercial Construction Loan?

by | Feb 22, 2024 | Ancon News

 

What do banks like to see when asking for a commercial construction loan?

 

If you’re planning to build a commercial property or undertake a major renovation project, you’ll likely need to secure financing through a commercial construction loan. These loans are specifically designed to cover the costs associated with commercial building projects and require a different set of documentation and requirements than a traditional business loan.

Here are some of the key factors that banks typically look for when considering a commercial construction loan application:

  1. A strong business plan: Banks will want to see a detailed business plan that outlines your project’s scope, including blueprints, architectural drawings, permits, contractor bids, and timelines. This plan should also include a detailed breakdown of the costs involved in the project, as well as an estimate of the property’s value upon completion.
  2. Strong credit history: As with any loan application, banks will want to see a solid credit history demonstrating your ability to make timely payments and manage debt responsibly. A high credit score and a low debt-to-income ratio can help increase your chances of being approved for a commercial construction loan.
  3. Adequate collateral: Commercial construction loans are typically considered riskier than traditional business loans, so banks may require additional collateral to secure the loan. This could include a lien on the property or other assets, such as a vehicle or investment account.
  4. Sufficient cash reserves: Banks will also want to see that you have enough cash reserves to cover unexpected expenses that may arise during the construction process. This could include things like delays in construction, unexpected material costs, or changes to the scope of the project.
  5. Experienced contractor: Banks will want to see that you’re working with an experienced and reputable contractor who has a track record of successfully completing similar projects. They typically require that the contractor be licensed and insured. Completing schematic drawings and understanding the actual construction cost can save time and additional questions from the bank’s underwriters. These documents should be included with your loan application.
  6. Proven track record: If you’re an established business owner, banks will want to see a proven track record of successful projects and profitability. This can help assure the lender that you have the experience and financial stability to manage a large-scale construction project.
  7. Projected cash flow: Banks will want to see that the property will generate sufficient cash flow to cover loan payments and operating expenses once the construction is complete. This could include projections of future rental income, sales revenue, or other revenue streams.

Securing a commercial construction loan requires a thorough and detailed application process. By working with a knowledgeable lender and providing all the necessary documentation and requirements, you can increase your chances of being approved for a commercial construction loan and successfully completing your building or renovation project.

Ancon Construction would love to help answer your commercial construction loan questions and learn more about your vision. A 100% Employee-Owned True Design-Build Construction firm since 1975. 

Let’s get your project started…together.

True Design-Build, 3-Part Video Series

True Design-Build, 3-Part Video Series

by | Apr 28, 2023 | Ancon News

Have you ever wondered how a construction project goes from an idea to a fully-realized structure?

 

Ancon Construction’s 2Min Drill on True Design-Build walks you through every step. In this three-part series, you’ll hear from Ancon’s in-house architect, Ben, and in-house designers, Matt and Bryan, who share their insights on the value of having an in-house design team and the importance of understanding a client’s vision. From the initial programming phase to the power of 3D modeling, you’ll gain a comprehensive understanding of Ancon’s approach to bringing client visions to life. Watch these informative videos below to learn more about Ancon’s True Design-Build process and how it can benefit your next construction project.

The Benefits of a Groundbreaking Event

The Benefits of a Groundbreaking Event

by | Apr 21, 2023 | Ancon News

A groundbreaking event is an essential part of any business launch, grand opening or refresh. It’s an opportunity to celebrate your success and build a strong foundation for your business.

 

Here are five reasons why having a groundbreaking event is important.

  1. Creates Awareness
    A groundbreaking event is an excellent way to generate buzz about your new business or product launch. It creates a sense of excitement and anticipation among potential customers, which can translate into increased foot traffic and sales.

2. Builds Credibility
By hosting a groundbreaking event, you are establishing your business as a reputable and trustworthy organization. It shows that you are committed to the success of your business and are willing to invest time and resources to make it successful.

3. Generates Media Attention
Organizing a groundbreaking event can attract media attention, which can lead to valuable publicity for your business. Local newspapers, TV stations, and online news outlets may cover the event, which can help spread the word about your business to a wider audience.

4. Creates Networking Opportunities
Hosting a groundbreaking event is an excellent opportunity to network with other business owners, community leaders, and potential customers. It can help you establish relationships that can be beneficial for your business in the long run.

5. Celebrates your Success
Enjoy the moment. This construction project might have been in the works for years. Take it all in, celebrate your success, and use this
opportunity to share your gratitude and excitement with others.

Contact us to learn more about how we can help you plan your groundbreaking event and provide you with a comprehensive checklist to ensure your event is flawless.

CLICK HERE to view and print flyer.

The Importance of a Ribbon-Cutting Event

The Importance of a Ribbon-Cutting Event

by | Apr 6, 2023 | Ancon News

A ribbon-cutting event is an essential part of any business launch, grand opening or refresh. It’s an opportunity to celebrate your success and build a strong foundation for your business.

 

Here are five reasons why having a ribbon-cutting event is important.

  1. Creates Awareness
    A ribbon-cutting event is an excellent way to generate buzz about your new business or product launch. It creates a sense of excitement and anticipation among potential customers, which can translate into increased foot traffic and sales.

2. Builds Credibility
By hosting a ribbon-cutting event, you are establishing your business as a reputable and trustworthy organization. It shows that you are committed to the success of your business and are willing to invest time and resources to make it successful.

3. Generates Media Attention
Organizing a ribbon-cutting event can attract media attention, which can lead to valuable publicity for your business. Local newspapers, TV stations, and online news outlets may cover the event, which can help spread the word about your business to a wider audience.

4. Creates Networking Opportunities
Hosting a ribbon-cutting event is an excellent opportunity to network with other business owners, community leaders, and potential customers. It can help you establish relationships that can be beneficial for your business in the long run.

5. Celebrates a Milestone
Celebrate your significant milestone in your business journey with a ribbon-cutting event. It’s a chance to recognize the hard work and dedication that went into making your business or product launch a reality and is a great time to recognize and thank staff.

Contact us to learn more about how we can help you plan your ribbon-cutting event and provide you with a comprehensive checklist to ensure your event is flawless.

CLICK HERE to view and print flyer.

Construction 101

Construction 101

by | Mar 29, 2023 | Ancon News

WHAT TO ASK WHEN SELECTING A CONSTRUCTION PARTNER 

These questions should give you a good idea of the contractor’s experience, abilities, and approach to construction projects. By asking these questions, you can make a more informed decision about whether or not to hire them.

Consider asking the commercial contractor:

  • What is your experience with projects similar to mine?
  • How does your firm handle design? (If they say they are Design-Build, do they have in-house architects on staff or are they using a 3rd party architect? True Design-Build construction firms have in-house architects and design teams. Third-party architects significantly increase the risk for the owner compared to a firm that has an in-house design team.)
  • Can you provide references from previous clients, and may I contact them?
  • What is your company’s size, and what is your team’s capacity to handle my project?
  • Do you provide an onsite superintendent? If so, are they dedicated to just one project or do they float on multiple jobs? (A dedicated superintendent focused only on your project will keep the project on track and provides cost mitigation.)
  • Ask the general Contractor to walk through the initial meeting all the way to the final construction phase. (This is a good way to help you understand if their process is a good fit for you and your project.)
  • If we need a budget for the project, what is your company’s process for creating that budget?
  • What is your company’s safety record, and how do you ensure the safety of your workers, your subcontractors, and the public during construction?
  • How do you handle change orders, and what is your process for requesting additional funds or time?
  • What is your policy on communication with clients during the construction process, and who will be the primary point of contact?
  • What is your process for handling unforeseen issues or problems that arise during construction?
  • Are you licensed and insured, and can you provide proof of this?
  • What makes you different from your competitors?

Ancon Construction would love to answer these questions and learn more about your vision. A 100% Employee-Owned True Design-Build Construction firm since 1975.

 

Let’s get your project started…together.

CLICK HERE to view or print this as a flyer.