Whether you’re a builder, developer, or investor, applying for a commercial construction loan requires detailed preparation. Gathering necessary documents and understanding each step can streamline the process and improve your chances of securing funding. Here’s a checklist to help you get organized before applying for a construction loan.
Key Documents for a Construction Loan Application
- Credit Scores Lenders will request access to credit scores of the primary business owners or officers. These scores reflect the financial habits and reliability of key individuals, giving lenders insight into how finances are managed.
- Identification and Business Information Be prepared with personal identification, like a driver’s license or passport, along with proof that your business is registered and compliant with regulations. This may include a Federal EIN, business licenses, and any required permits. You’ll also need contact information, including business addresses, phone numbers, and email addresses.
- Tax Returns Many lenders request at least two years of tax returns for both your business and major stakeholders. These records help lenders assess your income history and tax compliance. For low-leverage loans, tax returns might sometimes be waived, but it’s best to confirm with your lender.
- Business Bank Statements Lenders typically require recent bank statements, often covering the last two months, to verify liquidity and assess your financial stability. Avoid overdrafts or NSF (non-sufficient funds) fees, as they can raise concerns about financial management.
- Financial Statements Bring current personal and business financial statements, including balance sheets. These statements provide an overview of your financial health, showing assets, liabilities, and equity.
- Loan Purpose, Business Plan, and Collateral Lenders will need a clear understanding of how the loan will be used, which you can outline in a business plan or budget. This plan should show not only where the funds are allocated but also provide information on collateral and your strategy for repayment.
Each lender may have unique requirements based on the loan type, so check with your institution beforehand to ensure you have everything needed. Preparing these documents in advance can make your loan application process smoother and more manageable, helping you stay focused on your project. Need more help? Give us a call, we would be happy to assist you.
