Solutions for Refinancing Main Street Loans and Mid-Construction Financing

Mid Construction Financing

Problem:  What do you do when you need financing in the middle of a large commercial construction project?

The reasons could be cost overruns, project or material delays, lender fatigue.. so what are your options?

Simply put, a bank won’t provide additional funding to you in the middle of a construction project because it’s just too complicated and risky.

Costs are only continuing to increase right now, meaning adjustments will need to be continually made. The lender will likely order another appraisal to see if you can cover the new costs, and must determine if you’re maxed out on your loan-to-value (LTV) ratio. 

If you’re approaching the bank that initially provided you with a construction project loan, this money would need to be paid off, and everyone who worked on the property thus far would need to be paid as well.

If a bank was willing to deal with the paperwork alone, it’s likely that a borrower would not be able to meet the steep requirements for additional funding, including excellent credit.

Most banks do not have the expertise to pull this complex transaction off- but Private Debt lenders do.

Solution:

Fortunately, there are other funding sources available for borrowers who need to finish their construction project.

Private money lenders are able to offer more flexible requirements and a quicker borrowing process to help borrowers continue their projects. These lenders are more focused on the equity and asset value of a property.

Private lenders aren’t required to follow the same strict lending requirements that banks do, and instead have the freedom to evaluate each borrower’s scenario with common sense and the overall merits of the deal.

Select Capital has over 10 lending partners in the mid-construction industry offering the following:

  • Multifamily, Retail, Industrial and Office assets
  • Funding for projects $2 million to over $50 million USD
  • Closing in as fast as 30 days
  • Common-sense underwriting
  • Owner-occupied or non-owner-occupied construction loans
  • Non-recourse options
  • Interest only terms
  • Bridge to Permanent
  • Rates are SOFR plus 4-8% typically for 1-3 years
  • Interest reserves funded
  • Very flexible terms to suit the project
  • Weekly or monthly draws during construction

If you’re in the middle of a construction project and need a loan to complete it, reach out to Select Capital LLC in South Bend Indiana for guidance.

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