What Are Construction Loans?
Construction loans are small business loans used for building a residential home, duplex, multi-family unit, or a commercial building. They are typically intended to be a short-term solution until the building project is completed and someone else purchases the property. These types of loans help businesses expand construction and provide much-needed cash flow during a big building project.
How Do Construction Loans Work?
Because construction loans provide temporary funding, they work differently than other types of loans. Construction finance companies may only require the borrower to pay on interest for the duration of the project and in some cases, no payments are due for six months or more. This allows the construction to be completed and gives time to finalize more permanent lending or to sell the property to a buyer.
Construction Business Loans & Financing
As a construction business, you’re always focused on completing the next job. You need ample cash flow in order to take on additional projects, pay employees and purchase inventory. If you find yourself struggling to afford all of these responsibilities, you aren’t alone. Since 2008, we’ve provided over $300 million to more than 5,000 companies in the construction industry! Fora Financial is committed to providing construction business loans to companies just like yours. We take into consideration various factors, not just your credit score. When you receive construction financing from Fora Financial, here’s what your business can expect:
- Approvals in as little as 24 hours, and financing in your bank account in as little as 72 hours after receiving your approval.
- Construction business loans from $5,000 to $750,000, personalized to your business’s unique needs.
- Assistance from our expert Capital Specialists.
We work with construction companies nationwide, many of whom experience seasonal trends. Due to this, we are committed to working with you to find the construction business loan that will fit your specific needs. Regardless of if your business specializes in large commercial projects or smaller residential jobs, there are so many ways to take advantage of construction financing!
Why Get a Construction Loan?
- Take on Additional Projects
- Purchase Tools and Equipment
- Have Cash for Payroll
- Pay for Construction Materials
- Hire Seasonal Employees
- Manage Safety Standards
How to Get a Business Construction Loan?
It’s easy to get a small business construction loan from companies like Fora Financial. They can typically give you approval within 24 hours of applying and can start dispersing funds within a few days after that. You’ll need to prove how long you’ve been in business, how much cash flow you currently have, and meet other minimum criteria. These business construction loans can be used to purchase construction equipment and so much more.
Construction Business Loan FAQs
How Do I Know When I Need a Construction Business Loan?
Getting a construction business loan becomes necessary when construction companies want to expand their building projects. Sometimes they have enough capital to fund one project, but require additional funding to take on more projects and still have enough cash flow to pay contractors, buy new equipment, secure land, pay for materials, and more.
What Are the Different Types of Construction Loans?
Small business construction loans come in many different varieties. You can get a loan that is only for construction. This means that it funds building the structure, but then needs to be converted into a long-term loan or paid off. Construction to permanent loans are loans that cover both construction and long-term mortgage and can be especially useful for businesses that are building multi-family units for rentals. End loans are types of loans that can pay off a construction loan and be used long-term after that.
What Kind of Loan Is Best for Construction?
Most businesses start by creating a construction management strategy to ensure they secure the proper funding for both the short-term and the long-term. Many construction businesses find it helpful to get short-term construction only financing or construction business working capital to ensure they can get the project finished, have adequate cash flow, and have better terms for repayment than other types of lending.
Can SBA Loans Be Used for Construction?
SBA loans cannot be used to construct buildings for clients. Businesses can, however, leverage them to buy new construction equipment, build their own headquarters, or for acquiring another business.
Are Construction Loans Difficult?
Construction loans can be more difficult to get than other types of business lending. Because there is more inherent risk associated with new construction, lenders look more closely at a variety of factors to ensure not only are they protected, but also help in protecting construction companies from risk.
How Do I Qualify for Construction Financing?
Fill out an application with Fora Financial to determine if you qualify for construction business loans. They will look at factors like how long you’ve been in business, whether you have any bankruptcies, and your business income information to determine your eligibility.
Are There Minimum Down Payments on New Construction Loans?
Yes and no. Many new business construction loans do require a down payment. These can vary and go up to 20% or more depending on the qualifications of the business requesting financing. In some circumstances, a construction loan may require zero percent down as well.
How Does Construction Loan Interest Work?
As construction loan funds are dispersed, you will only owe interest on the amount you’ve received. This means that if you’ve been offered construction funding of $100,000, but you’ve only taken out $10,000 of it, you would only owe interest on that portion of the loan.
Why Work With Fora Financial for Construction Loans?
Fora Financial provides direct loans to construction businesses that qualify. This means that they can approve loans in as little as 24 hours, and start dispersing funds in as little as 72 hours after that. This is better than other types of loans that could take up to a few months to receive the funds from. This means that you can get working capital now and when you need it the most.