Loans for small-to-large commercial construction projects can intimidate business owners. The good news is, it’s a lot less intimidating than it sounds. If you’ve reached the exciting point in your business when it’s time to expand, most companies don’t have the cash on hand to pay upfront. Even if you do have the funds, it’s often smarter to choose the financing route to keep money in your account. ARC Construction works with businesses all over Jacksonville that choose to finance their project. Here’s our advice if it’s your first time financing a large sum of money:
Understand How Banks Determine Your Eligibility
Many factors determine your eligibility for a commercial construction loan. If you’re unsure about your likelihood for approval, there are a few categories on which you should focus.
Credit Score: You should aim for a credit score in the high 600s, at least. Lenders prefer to work with low-risk borrowers with high credit scores. A good score qualifies your business for different loans at attractive rates.
Debt-to-Income (DTI) Ratio: Lenders will evaluate the relationship between your business’ annual income compared to its debts. A simple formula to calculate your DTI is to divide your net operating income by your current annual debt obligations.
Evaluate the Different Types of Construction Loans
1. SBA CDC/504 Loan Program: The Small Business Administration (SBA) loan is one of the best options on the market. Characteristics include — competitive interest rates, affordable 10-30% down payments and approval to credit scores starting in the 600s. You can borrow up to $5 million at a financing term of 10-to-20 years.
2. Traditional Bank Loan: This option is common for businesses of all sizes. Repayment terms, down payments and approval requirements vary. Typically, you can expect a minimum down payment of 10% and a maximum financing term of 25 years. We recommend you speak with a few different banks to find the best loan for you.
Invest in Your Business and Partner with ARC Construction
Our certified commercial construction experts complete projects of all sizes in northeast Florida. We work with business owners just like you to bring their visions to life. From sleek storefronts to functional warehouses, it’s our goal to create a space that exceeds your expectations. Contact us today to get started.