Construction Financing

Commercial Construction Loans

Construction loans fund ground-up development and major renovation projects for commercial real estate. These short-term facilities typically feature 12 to 36-month terms with interest-only payments during the build period, funded through progressive draws as construction milestones are met. Lenders include banks, debt funds, and specialized construction lenders.

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Key Features

Construction Loans at a Glance

Loan Amount

$1M - $100M+

Term

12 - 36 Months

Rates

6.23% - 13.04%

Ltc

Up to 85% LTC

Structure

Interest-Only, Progressive Draws

Recourse

Recourse Typical, Non-Recourse Available

Overview

Ground-Up Construction & Renovation Financing

Construction financing is inherently higher risk than permanent lending, which means lender selection and deal structuring are critical. Experienced borrowers with strong track records can access competitive bank construction loans, while more complex or speculative projects may require debt fund capital. Key considerations include loan-to-cost ratios, interest reserves, completion guarantees, and the exit strategy — whether that's a permanent loan take-out, sale, or refinance.

Lender Sources

Banks
Debt Funds
Private Lenders
Credit Unions
CDFI Lenders

Ideal For

Ground-up apartment developments
Industrial warehouse construction
Build-to-suit retail and office
Hotel development and rehabilitation
Fix-and-flip residential projects
Major property renovations and repositioning

Track Record

Construction Loans Transactions

A selection of construction loans we have closed across the country.

Construction

$65,000,000

Office Building

New York, NY

Construction financing for a Class A office development in Long Island City, Queens, catering to tech and media tenants seeking modern amenity-rich space with Manhattan skyline views and excellent transit access.

Construction

$60,000,000

125-Unit Ground Up

Seattle, WA

Ground-up construction financing for a 125-unit luxury apartment development in Seattle's booming residential market.

Construction

$55,000,000

Multifamily Apartments

Washington, DC

Construction financing for a 250-unit luxury apartment development in DC’s Navy Yard neighborhood, one of the District’s fastest-appreciating submarkets with a thriving waterfront dining and entertainment scene.

Construction

$52,000,000

Multifamily Apartments

Miami, FL

Ground-up construction financing for a luxury 220-unit apartment tower in Miami’s Brickell corridor, one of the nation’s fastest-growing urban submarkets driven by corporate relocations and international capital inflows.

Construction

$43,900,000

Single Tenant Net Lease

Fairfield, CA

Build-to-suit construction for a national credit tenant in Fairfield, combining development returns with investment-grade lease security.

Construction

$43,400,000

Single Tenant Net Lease

Inglewood, CA

Major build-to-suit construction near SoFi Stadium in Inglewood, one of LA's most dynamic development corridors.

Construction Loans by City

Bridgeport-Stamford, CT

Hilton Head Island, SC

Related Property Types

Construction Loans are available for all major commercial property types. Explore financing by property category.

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FAQ

Construction Loans FAQ

Commercial construction loans are short-term facilities (12-36 months) that fund the development of new buildings or major renovations. The loan is drawn in stages as construction milestones are completed, with interest-only payments during the build period. Upon completion, the borrower refinances into permanent financing or sells the property.

Construction loans typically offer 65-80% of total project cost (loan-to-cost or LTC), depending on the lender, borrower experience, and project type. The remaining 20-35% must come from borrower equity, though mezzanine or preferred equity can fill part of the gap.

Most lenders require borrowers to demonstrate relevant development experience for construction loans. First-time developers may need to partner with an experienced co-sponsor or general contractor, or work with private lenders who are more flexible on experience requirements.

Construction loan rates typically range from 6.79% to 13.04%, depending on the lender type and project risk profile. Bank construction loans for experienced developers are at the lower end, while debt fund and private lender rates are higher but offer more flexibility.

A construction-to-permanent loan (or mini-perm) combines construction financing with a built-in permanent loan conversion upon project completion. This eliminates the need to refinance separately, saving time and closing costs, though terms may be less competitive than standalone permanent financing.

Construction loan draws are released based on completed work verified by an independent inspector. The borrower submits draw requests with supporting documentation, the lender's inspector verifies the work, and funds are released (typically within 5-10 business days). An interest reserve is usually built into the loan to cover debt service during construction.

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Contact Commercial Lending Solutions for a free, no-obligation quote on construction loans. We respond within 24 hours.

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Call: 310.708.0690 Text: 310.758.3064

Commercial Construction Loans

Construction Loans at a Glance

Ground-Up Construction & Renovation Financing

Lender Sources

Ideal For

Construction Loans Transactions

Construction Loans by City

Related Property Types

Related Insights

Construction Loans in Palm Springs: What Borrowers Need to Know

Construction Loans in Santa Cruz: What Borrowers Need to Know

Construction Loans in San Luis Obispo: What Borrowers Need to Know

Construction Loans FAQ

Ready to Get Construction Financing?

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