When it comes to commercial real estate projects, builders, real estate investors, and entrepreneurs often find themselves at the intersection of ambition and opportunity. They require capital to realize their visions so they often turn to private lenders, like Enact Partners, for commercial construction loans.
When it comes to commercial real estate projects, builders, real estate investors, and entrepreneurs often find themselves at the intersection of ambition and opportunity. They require capital to realize their visions so they often turn to private lenders, like Enact Partners, for commercial construction loans.
Understanding Business Construction Loans
Not all lenders are created equal. As a private lender, Enact Partners’ funds come from main street investors, not Wall Street. This means Enact Partners’ rates are not affected by the Fed’s interest rate hikes, and they do not shut down due to macroeconomic trends, like banks and Wall Street-backed institutional private lenders sometimes do.
For example, during the height of the COVID pandemic and more recent bank crises, many banks stopped lending for commercial projects (in some cases right in the middle of construction). Enact Partners continued to lend.
Why Is a Commercial Construction Loan Needed?
To build a new business property or improve an existing one, borrowers need capital for horizontal and vertical construction. Commercial construction loans can assist borrowers in achieving their long-term financial objectives by boosting the property’s worth, enhancing operations, and resulting in greater rental rates or resale value.
Enact Partners has an extensive background in construction and renovation projects. Thus, builders and developers benefit from working with Enact Partners as an experienced lender who understands the complexity of residential fix and flip projects, commercial repositioning, value-add development projects, tenant improvements, and remodeling projects.
Lower Cost of Capital
Getting funding straight from investors can be expensive. As private lenders, Enact Partners doesn’t participate directly in profits like real estate investors do. In fact, a loan through Enact Partners is usually less expensive to borrowers than using investor cash.
Private lenders make their money in the form of interest payments and loan fees. Commercial construction loans carry significant risk compared to home mortgages, so they usually incur higher interest rates. These rates often vary depending on the lender, borrower creditworthiness, location of the property, and the nature of the project.
While interest rates and associated fees may be higher with a private lender, the loan process with a private lender is typically more flexible and much faster than banks. This adds value for borrowers that can exceed the interest rate difference.
For a short-term commercial construction loan (usually 6 to 36 months), the overall cost to borrowers is generally not that much different than that of a bank loan.
Advantages of Seeking Commercial Construction Loans with a Private Lender
Investor cash is one way to fund a commercial real estate project, but that can be expensive. Funding through private lenders, like Enact Partners, is generally a more appealing option. Here are some reasons why:
Flexibility: Compared to banks, private lenders are typically much more willing to work with borrowers to tailor loans to the needs of the borrower and the project. For example, Enact Partners engages clients with an attitude of, “How can we get this done?” It’s the kind of approach that leads to expediency, transparency, success, and long-lasting relationships.
Speed: Loans through private lenders typically close within weeks, not months or years. For example, Enact Partners typically sees the lending process take from 7 to 45 days to close, depending on how quickly the borrower provides necessary paperwork and the appraiser completes any assessments.
Partners Not Adversaries: Banks offer little flexibility when it comes to loan structures and addressing borrower needs. Anything outside of their standard loan “box” is often a “no-go” for them, especially with commercial real estate loans. This approach doesn’t make banks bad, but it does make them more of a lending opponent versus a lending partner like Enact Partners.
Sharing Expertise: Private lenders often have expertise they share with borrowers. For example, Enact Partners has an extensive background in commercial real estate development, investment, and lending. Enact Partners knows how important fast, flexible access to capital is for horizontal and vertical improvements, property purchases, fix-and-flips, and other real-estate-backed investment opportunities. Enact Partners wants borrowers to succeed.
Borrower Reputation: In addition to performing due diligence on borrower creditworthiness, borrower reputation and the nature of the project for which funds are being sought matter greatly to private lenders. For example, Enact Partners assesses borrower experience and how a borrower has handled previous projects. In most cases they get personal guaranties to ensure borrowers work hard to complete projects, address cost overruns, and solve any challenges that come up.
Access to Decision Makers: Working with private lenders like Enact Partners, borrowers also gain direct access to the lending decision makers, something rarely possible with banks. Enact Partners’ streamlined process means borrowers get to work directly with lending decision makers, not a nameless, faceless loan bureaucracy beholden to regulations and paperwork.
Can-Do Attitude
Private lenders like Enact Partners offer access, stability, and empowerment for builders and investors who often can’t fund their projects through traditional banks. With streamlined processes and flexible lending decisions tailormade to borrowers and their projects, private lenders bring a can-do attitude to commercial real estate lending.
Contact us about your commercial construction loan borrowing needs:
(760) 516-7776 | [email protected] | www.enactpartners.com
