Commercial Construction Financing: How To Get Started In 2024 (Quick Guide)

Jamie Jacobs
Jamie Jacobs joined APX Construction Group in June of 2020 specializing in interior design, marketing, event planning, and business development.
  • Getting the right commercial construction financing for your building project can be the difference between a project going smoothly and having all sorts of problems.

    Luckily we know a thing or two about commercial construction and getting your commercial construction financing in order for the project. These projects are expensive: not only do you need to pay for all of the materials, but also plans, permits, and your working crew.

    What are Construction Business Loans?

    Construction business loans are used to finance commercial construction for your commercial building project. They are a type of mortgage that you can get to pay for the materials and all of the other costs that come with this kind of project. The loans themselves can be used for many different purposes. We’ll break down some of those different uses below.

    What are Construction Lines of Credit?

    Similar to a construction business loan, a construction line of credit is a type of commercial construction financing. However, a line of credit is different because it’s only for the materials and labor needed to complete your project, with other costs paid for separately (i.e., permits or plans).

    What are Construction Bonds?

    Construction bonds are also used as commercial construction financing options, but they work differently than loans or lines of credit. These loans are used to pay for the project but with a few stipulations. The bonds need to be signed by all three parties: the lender, the company or person receiving the work, and the person doing the work. To keep everyone accountable and the project on track, a bond can default to different members of those three parties if different parts of their agreement aren’t upheld.

    Terms for Commercial Construction Business Loans

    Commercial construction business loans are only offered to commercial entities and not private individuals. If you’re interested in a commercial construction loan, then it’s important that you provide the lender with some information about your company. They’ll need things like your total assets, the net worth of your property (if applicable), as well as other financial statements for an overview of your company.

    These commercial construction loans can have several different terms depending on how much you borrow, the interest rates, and what type of commercial property (i.e., commercial warehouse) will be built during this project.

    Some of the terms may include the fees associated with obtaining the loan, the project receiving all of the proper permits, and the frequency of payouts from the loan. For example, a private loan can be all paid at once in many cases. But a commercial business loan that can sometimes amount to millions or billions of dollars will only be paid out over time.

    What are Commercial Construction Financing Loans for?

    Commercial construction loans can be used for a number of different commercial property types and projects. They can also be used to purchase different pieces of equipment or pieces of property that will be used as part of the project.

    Commercial Real Estate Loans

    This type of commercial building project would include the purchase or renovation of commercial real estate, such as an apartment complex or store space. The lender is lending to you in order to buy out that commercial property and make improvements on it so that it can later be rented out or sold.

    Construction Loans

    This commercial building project is one that requires the physical construction of a commercial property, such as office space for your business. The lender will lend you money in order to cover all costs involved with the materials and labor needed to complete this kind of project.

    Equipment Loans

    Equipment commercial construction financing can be used to purchase different pieces of equipment, such as heavy machinery or tools. This type of commercial equipment is often purchased for a company’s use, and so the loan will then go towards paying off that equipment over time.

    Paying Employees or Contractors

    While commercial construction financing can be used to pay for materials and labor, it also works as a way to help you pay your employees or contractors. In this case, the company borrows money from the lender in order to ensure that they have enough funds available at all times during their commercial building project.

    Meeting Payroll During Projects

    Commercial construction financing can also be used as a way to ensure that the company has enough funds available to keep up with payroll. This is especially important if there is any downtime in which the company isn’t making as much money because of the construction project that’s going on.

    Starting a New Business

    Commercial construction loans can also be used to help start a commercial business. There are many different types of commercial businesses available, and all of them have the potential to need commercial construction financing. Whether that financing is for a building or for some of the different elements we mentioned above, a loan can be a huge help.

    Where to Shop for Commercial Construction Loans

    In order to find commercial construction financing, the first place you’ll want to look is banks. Banks are typically going to be the most common choice when it comes to commercial construction financing, as they will often offer loans at competitive rates. 

    But commercial construction loans can also be found in other places, such as commercial mortgage lenders. These are going to offer competitive rates and a wide range of commercial property types and commercial loans offered.

    You might also be able to get commercial loans through larger construction companies. These loans would likely have stricter terms and probably benefit the company giving the loan more than it would benefit your business. But it is always an option.

    While you’re out looking for the perfect loan for your business, don’t forget about the importance of finding the right commercial construction company to work with. APX Construction Group is one such company, and we’d be happy to help you or learn more about your project. Our team can provide full-service construction support, including design, permit help, site prep, and construction. From start to finish, APX is your commercial building partner. Reach out to us today to learn more!

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