Securing finance to build a new structure or business complex is a process associated with large sums of money and considerable professional projections. Also, the property price itself is not the only cost involved, as there are the concomitant fees, commissions and administrative charges. Then there is also the fact that property finance transactions are generally long term in nature, perhaps twenty years in duration. However, in cases where the structure has not yet come into existence, the commercial construction loans that are used are more sophisticated than a mere contract of sale.

The most important use of a business property is the making of money. In light of this issue, the credit provider (typically a bank) is required to determine whether the property’s income is going to be adequate to service the loan instalments or is germane to the amount of money lent. In turn, the lender also needs to be sure that the property’s intended utilization is going to be able to secure that type of income.

Once the feasibility of the project has been established, the borrower and the lender need to thrash out the terms and structure to be included in the financing agreement. A construction loan typically has more than one phase. Initially, there is a loan to cover the costs involved in the actual building process. Once the structure is operational, i. E. Producing the anticipated income, a longer term agreement commences to pay it off entirely. The transition between the two loans is made possible by what is known as a mini-perm loan.

In approving the agreement, the lender needs to assess the building contractor’s history, capabilities and industry reputation. There also needs to be a verification of the contract price in relation to other similar projects, and this may require a detailed analysis of how the borrower or contractor intends to spend the available money.

It is impossible to inspect a non-existent building, so the borrower must also provide the lender with all the necessary technical details of the construction, such as the time frame, engineering information, quantity surveys and any other data affecting the credit assessment.

Banks and other institutions do not easily approve requests for money. People approaching them should therefore provide a detailed business plan, inclusive of solid market information. If the lender decides that the project is not suitable for the current market, they are not likely to approve the borrower’s request.

A new construction project is always an exciting prospect and is a stimulant for growth in the local economy. The professional processing and finalization of financing arrangements makes the project leadership’s job easier and saves time for both parties.

Tom G. Honeycutt is a full-time real estate entrepreneur in Atlanta, GA. Tom helps readers by providing practical and useful knowledge to better understand lending choices. If you are looking Commercial Investment Loan Lenders Application Form | Atlanta, GA He suggests you check out the website iFund International