Clear House Lending connects real estate investors and developers with the right lender from our network of 6,000+ private capital sources. Bridge, DSCR, SBA, hard money, and construction loans -- most borrowers get term sheets within 48 hours.
Key Takeaways
A commercial construction loan provides short-term financing for building new commercial properties, renovating existing structures, or expanding current facilities. Unlike traditional mortgages that fund completed properties, construction loans disburse funds in stages as work progresses, and you only pay interest on the amount drawn.
These loans cover ground-up development of multifamily apartments, office buildings, retail centers, industrial facilities, medical offices, and specialty properties. Whether you are an experienced developer building a 200-unit apartment complex or a business owner constructing your first owner-occupied facility, construction financing provides the capital to bring your project from plans to completion.
At Clear House Lending, we connect developers and business owners with our network of construction lenders to find the best rates and terms for each project. From vertical construction to horizontal development, we structure financing that matches your timeline, budget, and exit strategy.
$96.2B
commercial and multifamily construction loan commitments in 2023
Source: Federal Reserve
65-75%
typical loan-to-cost (LTC) for ground-up construction
12-36 months
typical construction loan terms based on project timeline
Source: Clear House Lending Market Data
Prime + 1-3%
common construction loan pricing structure
Construction loan rates vary significantly based on who you borrow from. Each lender type offers different advantages in terms of rate, speed, flexibility, and qualification requirements.
| Lender Type | Rate Range | Max LTC | Best For |
|---|---|---|---|
| SBA 504 | 6.5-8.5% | 90% | Owner-occupied facilities |
| Traditional Banks | 7.5-9.5% | 75% | Experienced developers, strong financials |
| Credit Unions | 7.25-9.0% | 75% | Local projects, member relationships |
| Private/Bridge Lenders | 9.5-13% | 80% | Speed, flexibility, complex projects |
| Hard Money | 11-15% | 70% | Time-sensitive, credit challenges |
Use our commercial mortgage calculator to estimate your monthly payments and total project costs across different rate scenarios.
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A standalone construction loan covers the building phase only, typically 12-24 months. Once construction is complete, the borrower refinances into permanent financing. This approach works well for developers who want maximum flexibility to shop for the best permanent rate or plan to sell the completed property.
Also called single-close or one-time-close loans, these combine construction and permanent financing into a single transaction. The loan automatically converts from a construction draw facility to a permanent mortgage upon completion. This eliminates a second set of closing costs and removes the risk of rate changes or requalification between phases. Learn more about this option in our construction-to-permanent loan guide.
The SBA 504 program is the strongest option for business owners building owner-occupied commercial properties. With down payments as low as 10% and below-market fixed rates on the CDC portion, SBA construction loans make facility ownership accessible for small and mid-sized businesses across industries including medical, dental, veterinary, manufacturing, and hospitality.
Not all construction financing involves building from scratch. Renovation loans fund major improvements, conversions, and adaptive reuse projects that transform existing structures. These loans are structured similarly to ground-up construction with milestone-based draws and inspections.
Construction loan underwriting evaluates both the borrower and the project. Lenders want to see that you have the experience, financial capacity, and team to complete the project successfully.
Read our detailed construction loan approval guide for step-by-step qualification strategies.
The construction loan process follows a structured timeline from application through project completion. Understanding each phase helps you prepare properly and avoid delays.
Submit your project summary, development resume, and preliminary budget. We match your project with the best-fit lenders from our network and provide initial term sheets for comparison.
The selected lender reviews complete documentation including plans, permits, contractor qualifications, environmental reports, and financial projections. An independent appraisal establishes the as-completed and as-stabilized values.
Loan documents are executed, title insurance is issued, and the initial draw funds land acquisition and mobilization costs. Construction begins.
As construction progresses, you submit draw requests at each milestone. A third-party inspector verifies work completion before funds are released. Most projects have 5-10 draw milestones. You pay interest only on amounts disbursed.
Upon project completion, the loan either converts to permanent financing (construction-to-permanent) or you refinance into a long-term mortgage. For investment properties, this typically occurs after achieving stabilized occupancy.
Commercial construction loan rates range from 6.5% to 15% depending on lender type. Bank rates run 7.5-9.5%, credit unions 7.25-9%, private lenders 9.5-13%, and SBA 504 loans offer 6.5-8.5%. Your final rate depends on project type, borrower experience, and loan-to-cost ratio.
Most commercial construction loans require 20-35% equity or down payment. SBA 504 loans allow as little as 10-15% down for owner-occupied properties. The exact requirement depends on lender type, project risk, and your development experience.
Key requirements include development experience, a detailed project budget and timeline, approved architectural plans, a qualified general contractor, site control or ownership, and typically a minimum credit score of 680. Lenders also evaluate the project's feasibility and your exit strategy.
A standalone construction loan covers only the building phase and must be refinanced upon completion. A construction-to-permanent loan automatically converts to a permanent mortgage once construction is finished, saving you a second set of closing costs and the risk of rate changes between phases.
Traditional bank construction loans take 60-90 days to close. SBA construction loans may take 90-120 days due to additional documentation. Private construction lenders can close in 2-4 weeks for experienced developers with complete project packages.
Construction loans disburse funds in stages called draws, tied to project milestones like foundation completion, framing, and mechanical rough-in. A third-party inspector verifies each milestone before funds are released. You only pay interest on the amount drawn, not the full loan commitment.
Whether you are planning a ground-up multifamily development, a medical facility build-out, or a commercial renovation, Clear House Lending connects you with construction lenders who specialize in your project type.
Contact our team to discuss your project and get pre-qualified for construction financing. We will match you with lenders offering the best rates and terms for your specific development.
Explore related resources:
Financing solutions for every stage of the commercial property lifecycle
Financing for the purchase of new commercial assets
Rate, term, and cash-out solutions for existing commercial debt
Long-term, fixed-rate financing for stabilized commercial properties
Short-term funding for quick acquisitions or property stabilization
Securitized, large balance non-recourse commercial real estate mortgages
Government-backed financing for owner-occupied commercial real estate
Commercial financing
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