Advisory Services USA Inc. is one of very few Commercial Funding Advisory Companies that have the knowledge and background to arrange substantial commercial construction loans and construction financing.
One of the distinguishing characteristics of commercial building construction is that the physical building has not yet been constructed. In other words, the full and final collateral does not exist yet. Therefore, the lender makes only partial construction loan disbursements. Of course, the lender monitors these disbursements very carefully. Prior to the release of subsequent construction disbursements, the construction lender verifies that the borrower properly used the last disbursement for the intended construction expenses. The lender also checks that the borrower submitted all lien waivers. Our construction funding sources consider many factors when underwriting a commercial construction loan, including the developer’s track record, the proposed development’s proforma, and so forth.
Types of Commercial Construction Loans
Land Development Loans: These are risky loans in that raw land will only collateralize a small percentage of the value of developed land. Therefore, borrowers often need to provide additional assets as collateral. Lenders look for developers with solid track records before granting this type of loan. You can use loan proceeds to clear land, install infrastructure (i.e., water, sewer, power), subdivide the land, and so forth.
Acquisition & Development Loans: These loans cover the purchase cost and subsequent development of raw or partially developed land. Proceeds apply to any necessary improvements before new construction begins.
New Construction Loans: These are short-term loans, usually interest-only. The term is commonly up to 24 months, but the lender might grant extensions to cover additional fees. Construction loans can be set up as revolving credit lines to fund separate construction loan stages or separate properties in a multi-phased construction project.
Bridge Loans: In some situations, a developer needs construction funding while they still owe money on a previous project that has not yet sold. A bridge loan is for this circumstance. The loan may require a lien on the for-sale property to act as collateral for the loan. When the construction is rehabilitation rather than new construction, the existing property can also serve as collateral. Bridge loans are also temporary. Terms are usually for a year or less, though longer terms can be negotiable.
Mini-Perm Loans: Mini-perm loans are also temporary loans. They typically follow the completion of a construction project and the issuance of a Certificate of Occupancy for the new building. A mini-perm loan settles any remaining balance on a construction loan. It remains in place as the property stabilizes and generates income, usually for a period of two to three years beyond the initial construction loan.
Takeout Loans: A takeout loan is a permanent mortgage on a commercial construction project that replaces the relatively short-term financing, such as a mini-perm loan.
Mezzanine Loans: Mezzanine loans are a mechanism to add financing to an existing construction project. It adds debt to the capital stack through subordinated debt that increases the borrower’s leverage. For example, a mezzanine loan might increase the borrowers leverage from a 70% loan-to-cost (“LTC”) to an 95% LTC. Mezzanine loans typically charge higher interest rates and may have additional restrictive terms.
One of the distinguishing characteristics of commercial building construction is that the physical building has not yet been constructed. In other words, the full and final collateral does not exist yet. Therefore, the lender makes only partial construction loan disbursements. Of course, the lender monitors these disbursements very carefully. Prior to the release of subsequent construction disbursements, the construction lender verifies that the borrower properly used the last disbursement for the intended construction expenses. The lender also checks that the borrower submitted all lien waivers. Our construction funding sources consider many factors when underwriting a commercial construction loan, including the developer’s track record, the proposed development’s proforma, and so forth.
Types of Commercial Construction Loans
Land Development Loans: These are risky loans in that raw land will only collateralize a small percentage of the value of developed land. Therefore, borrowers often need to provide additional assets as collateral. Lenders look for developers with solid track records before granting this type of loan. You can use loan proceeds to clear land, install infrastructure (i.e., water, sewer, power), subdivide the land, and so forth.
Acquisition & Development Loans: These loans cover the purchase cost and subsequent development of raw or partially developed land. Proceeds apply to any necessary improvements before new construction begins.
New Construction Loans: These are short-term loans, usually interest-only. The term is commonly up to 24 months, but the lender might grant extensions to cover additional fees. Construction loans can be set up as revolving credit lines to fund separate construction loan stages or separate properties in a multi-phased construction project.
Bridge Loans: In some situations, a developer needs construction funding while they still owe money on a previous project that has not yet sold. A bridge loan is for this circumstance. The loan may require a lien on the for-sale property to act as collateral for the loan. When the construction is rehabilitation rather than new construction, the existing property can also serve as collateral. Bridge loans are also temporary. Terms are usually for a year or less, though longer terms can be negotiable.
Mini-Perm Loans: Mini-perm loans are also temporary loans. They typically follow the completion of a construction project and the issuance of a Certificate of Occupancy for the new building. A mini-perm loan settles any remaining balance on a construction loan. It remains in place as the property stabilizes and generates income, usually for a period of two to three years beyond the initial construction loan.
Takeout Loans: A takeout loan is a permanent mortgage on a commercial construction project that replaces the relatively short-term financing, such as a mini-perm loan.
Mezzanine Loans: Mezzanine loans are a mechanism to add financing to an existing construction project. It adds debt to the capital stack through subordinated debt that increases the borrower’s leverage. For example, a mezzanine loan might increase the borrowers leverage from a 70% loan-to-cost (“LTC”) to an 95% LTC. Mezzanine loans typically charge higher interest rates and may have additional restrictive terms.
How we are compensated?
To Retain our services:
* We arrange funding from $5 million on up, with virtually no upper limit.
- We charge a reasonable flat loan placement fee which is detailed and explained in our Non Exclusive Advisory Services Funding Agreement.
- 25% of the agreed to funding placement fee is payable to us within two business banking days from the date our agreement is signed. This fee is credited against the total placement fee and not in addition to.
- The total loan placement fee agreed to is 100% refundable if we do not perform as contracted in the timeframe agreed to
- We do not charge any additional points for our commercial loan advisory services. If a specific lender or funding source pays us any kind of referral or finders fee, that amount is credited against any fees charged to our clients.
- There is No Double Dipping Allowed
- Our agreement is non exclusive.
- Our clients are free to work with other brokers or lenders at their own discretion as long as they are in compliance with the non circumvention articles of our agreement.
- We believe in competition and capitalism and may the best offer and terms win!
To Retain our services:
- Book your consult which is free (click here)
- If we feel we can assist you and get you a funding offer bases on your specific needs and situation, you will be sent our Advisory Services Funding Agreement for your signature.
- Once our initial placement retainer fee is received, we are on the clock.
- There is no surprises with our plan.
- You will know what your total loan fees and costs are upfront.
- The flat fee system we employ is not how brokers work.
- We are NOT Loan Brokers.
- We work for our clients, not for any specific bank, lender or funding source.
* We arrange funding from $5 million on up, with virtually no upper limit.
Please use our secure online application to begin the process of obtaining your custom Construction Funding Package
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