What Are The 2024 Projected Commercial Construction Loan Rates?

Last updated on February 2nd, 2024 at 06:48 pm

July 24, 2022
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Finding the right loan for your project can be complex, but at Diamond Contractors, we’re dedicated to making this process as straightforward as possible for our clients. As we enter 2024, let’s review the latest updates on commercial construction loan rates.

Current Commercial Construction Loan Options

Commercial construction loan options now start at $5 million and are interest-only during construction. These include short-term, life company, and permanent loans with earn-outs. Notably, non-recourse loans begin at $20 million, offering a range of options for different project scales.

Latest Loan Rates and Trends

As of January 2024, we see diverse commercial real estate financing trends. According to recent analyses, the federal funds rate currently ranges from 5.25% to 5.50%, with the Federal Reserve hinting at potential rate cuts in the coming year. This shift is a positive sign for lenders and borrowers in the commercial real estate market.

For more specific rates, as of early January 2024:

  • The 30-year Treasury rate stands at 4.13%.
  • The 10-year Treasury rate is at 3.99%.
  • The Wall Street Journal Prime Rate is currently 8.5%.
  • The 30-day SOFR rate is 5.34%, and the 90-day SOFR is 5.35%.

SBA 7(a) and SBA CDC/504 Loan Programs

In 2024, SBA loans continue to support small businesses, especially in commercial real estate. The Small Business Administration backs these loans, offering flexible financing options for various business requirements.

SBA 7(a) Loan Program: The SBA 7(a) program caters to a broad range of needs, including acquiring land or property for small business use. These loans offer up to $5 million with interest rates ranging from 9.50% to 11.25%. Their repayment terms extend from 7 to 25 years.

SBA 504 Loan Program: The SBA 504 loan differs from the 7(a) in its higher loan limit, reaching up to $15 million, and its structure involves SBA-approved certified development companies. These loans provide up to 90% leverage for properties and feature interest rates of approximately 8.50% ± 1%. The repayment period varies between 10, 20, and 25 years.

SBA Express Loans: SBA Express loans offer loan amounts from $25,000 to $500,000 for quicker financing needs. Their interest rates lie between 13.00% and 15.00%, with repayment terms ranging from 7 to 25 years.

Based on the prime rate of 8.5%, these SBA loan programs in 2024 will offer adaptable and competitive financing for small businesses in the commercial real estate sector.

Diverse Financing Options

The commercial real estate loan market in 2024 continues to offer a variety of financing options:

  • Fannie Mae Loans range from 5.39% to 7.49% interest rates.
  • Freddie Mac Loans offer rates between 6.09% and 6.39%.
  • CMBS Fixed Loans have interest rates from 5.74% to 8.74%.
  • HUD Multifamily Loans, such as the HUD 223(f) and HUD 221(d)(4), have interest rates ranging from 4.49% to 6.99%.

Bridge and Mezzanine Financing

Bridge Loans are available for short-term projects with interest rates between 6.34% and 15.34%. Mezzanine Financing, offering increased leverage, has interest rates between 8.0% and 9.0%.

Choosing the Right Loan

Navigating these options and choosing the right loan for your project depends on various factors, including property type, economic conditions, and creditworthiness. It’s crucial to consider how these factors influence the rates and terms you’ll receive.

Let Diamond Contractors Assist You

Our family-owned commercial construction company, with over 25 years of experience, specializes in ground-up construction projects, retail renovations, remodeling services, and national rollouts. Understanding the crucial role of timely and accurate estimates in the commercial construction loan process, Diamond Contractors is dedicated to delivering top-tier service. Our expertise extends to navigating the complexities of commercial construction loan rates, ensuring you find the optimal financing solution for your project. Contact us today for professional guidance and support tailored to the unique demands of your commercial construction venture. We’re here to help every step of the way.

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