NY construction projects come in all shapes and sizes. Smaller projects may involve renovating or expanding existing structures. Larger projects may involve demolition followed by construction from the ground up. Regardless of size, having adequate capital to cover labor, materials, and other expenses is vital to the success of any NY construction project.
Traditional Loans and NY Construction Risks
Traditional lending institutions have all but stopped financing NY construction projects. The main reason for this is that construction is not inexpensive and there are too many risks involved. Traditional lenders, such as banks, do not want to lend money for a project that could potentially use up all the funding before construction is completed. The quality of work cannot be guaranteed, and change orders can lead to budgetary overruns. Because of these potential risks, traditional lenders are extremely wary about approving construction loans and have raised the requirements to weed out most independent commercial real estate investors.
Reducing NY Construction Risks for Loan Approval
Fortunately, there are construction loans available to commercial real estate investors who do not want to deal with the red tape of cost-prohibitive bank loans. NY construction loans provide the capital necessary to cover expenses at every stage of the project so a property can start generating revenue quickly. To help expedite the loan process, there are a few things commercial real estate investors can do to reduce risk to their lenders. Having a third party construction guaranty or a partner with an equity stake in the project greatly reduces the perceived risk, and will help tremendously when applying for a loan. Lenders also want to see detailed project plans, budgets, and which contractors have been lined up to perform the construction. Hiring a reputable contractor looks better to a lender than trying to take on a construction project on a shoestring budget and a tight timeline. Commercial real estate investors should also show the potential profitability of the completed project. The above factors will help to get a fast approval on a large loan request.
Financing NY Construction Projects
Express Capital Financing offers funding solutions for commercial real estate projects of all shapes and sizes. From SBA and conventional loans on up to mezzanine and equity financing for larger projects. Whether you are renovating a rental, expanding facilities, or taking on a ground-up construction project, contact the experts at Express Capital Financing.