A construction loan refers to financing in which the capital is used to purchase construction materials and labor. Typically, a loan designed for construction contains features such as interest reserves, and thus the repayment ability is based on a liquidity event, such as a retail sale or a refinance upon completion. Additionally, a construction loan may engage a third-party, called a “controlled fund” manager, to monitor and disburse draw requests (progress payments) to ensure that the project is completed.
Individual construction loans for new-built homes are usually obtained by the homebuilder or prospective owner. In the past, smaller buildering companies had more access to capital and financing, however it is more common these days for the home buyer to obtain the loan. Our peer to peer lending platform is a great resource for these individuals.
Commercial lending from traditional banks is also difficult to obtain for commercial development and construction loans. Developers need to obtain funding to buy the land outright, then use the land as collateral for the remaining funds needed to build. Commercial development can be risky, especially if all parties involved do not have a track record of successful projects. Blackhawk is well aware of the vast quantity of viable construction and development projects that need capital backing and is here to offer that necessary support.
Common industries seeking construction loans:
- Construction & Development
- Oil & Gas Companies
- Special-Use Properties
- Mining Companies
- Golf Courses
- Residential Homes
- Retail & Office
- Mobile Home Parks
- Medical Facilities
- Entitled Urban Infill Land
Our general guidelines for construction loans:
- The property is a suitable type to qualify for a construction loan
- The property is located in the United States (includes Alaska & Hawaii)
- The property Loan to Cost (LTC) ratio is up to 85%
- The loan amount is between $200k and $100 Million
- The loan term is between 1 to 2 years
Good candidates for construction loans are:
- A borrower with demonstrated ability to complete prior projects
- A borrower who has credit score of 650+
- A property that does not require a Loan to Cash (LTC) ratio over 85%
- A desired minimum loan amount of $200K
- No recent bankruptcies, foreclosures, or tax liens
Why Blackhawk is a preferred solution for construction loan borrowers:
- The borrower makes interest only payments
- Loans are approved based on stated income and bank statements only
- There are no minimum FICO requirements
- We provide non-recourse, secured loans
- We offer pre-payment flexibility
Our unique automated matching platform is fine-tuned to broker the right borrower with the right lender, in a short amount of time and with a very straightforward process. If you are interested in a loan, please apply today, or if you would like to invest, please register to become a capital backer!