In general, commercial construction lenders will not finance 100% of a project.
What they will finance — called the loan-to-cost ratio or loan-to-value ratio — usually ranges from around 70% to around 90%.
You’ll have to cover the cost of the rest of the project, usually by making a down payment.
Guarantee fees, processing fees and project review fees can increase the cost of construction business loans.
Some lenders offer to roll these fees into the loan, so you can pay them off over time instead of needing to provide cash upfront. Interest rates on commercial construction loans can range between 4% and 12% or beyond, depending on the lender.
A lender may also request a property appraisal to assess the value of the property and minimize their risk. Some lenders require you to pay for the appraisal, which can cost between $2,000 and $10,000, depending on the company and the size of the property.