With so many options to choose from, finding the best loan for your project can be difficult and incredibly stressful. We’ve gathered some of the most frequently used options in one place. Here at Diamond Contractors, we want to make this process as easy as possible for our valued customers. We’ll do everything we can to work through this process with you. Here’s a brief run-down of commercial construction loan rates, as of the beginning of 2022.
Loans from Frequently Used Lenders
The National Bank Commercial Construction Loan has a 3.79% interest rate. The Life Company Commercial Construction Loan is at a 4.25% interest rate. The Regional Bank Commercial Construction Loan is at an interest rate of 4.45%. These loans are based on the 30-day LIBOR rate and change monthly.
The Community Bank Commercial Construction Loan is based on Prime Rate. This loan rate will change as the prime rate changes. It is currently at a 4.75% interest rate.
The Private Debt Fund Construction Loan interest rates range from 6.5% to 8.25%.
The Hard Money Commercial Construction Loan has between a 7.95% and 12% interest rate.
The FHA Commercial Construction Loan is based on the 10-year U.S. Treasury rate. The interest rate is fixed for the life of the loan and the full 40 years for the permanent loan. It currently ranges between 3.49% and 3.89% interest rates.
SBA 7(a) Loan Program
This is the Small Business Administrations’ foremost loan program. There are several different types of loans available under this category. In general, the SBA 7(a) mounts up to $5 million. Its terms go up to 25 years, but loans for working capital or equipment purchases have a term of up to 10 years. Here are the current SBA 7(a) variable loan interest rates:
$0-$25,000 – With the maturity of under 7 years, the rate standard is Base + 4.25%. The variable rate maximum is 7.5%. If the maturity is 7 years or more, the rate standard is Base + 4.75% with a variable rate maximum of 8%.
$25,001-$50,000 – If your loan matures under 7 years, the rate standard is Base + 3.25%. The variable rate maximum is 6.5%. When your loan matures after 7 years or more, the rate standard is Base + 3.75% with a variable rate maximum of 7%.
$50,001 or above – If the loan matures under 7 years, the rate standard is Base +2.25% with a maximum variable rate of 5.5%. With the maturity of 7 years or more, the rate standard is Base + 2.75% and a maximum variable rate of 6%.
SBA CDC/504 Loan Program
This loan is actually two separate loans. One is from a bank for 50% or more of the loan amount, and one from the Certified Development Company for up to 40%. You’ll be responsible for paying the remaining percentage as a down payment. That’s usually 10%, but it could be more in some situations. The interest rates from the SBA only apply to the CDC part of the loan. The lenders (banks) will set their own rates for their portion. That’s usually an increment above the rate for 5 and 10-year U.S. Treasury Issues.
The current rate of a 10-year loan is 3.109%. A 20-year loan has an interest rate of 3.022% and a 25-year loan has a 3.168% interest rate.
Mezzanine Loans are usually 10% current pay interest, 2% deferred interest, and a 1-2% yield enhancement. Together it brings the total to 13% or 15%. You will also need to reimburse the lender for legal and due diligence costs.
Trust us to Help
Our family-owned commercial construction company has been helping companies like yours for over 25 years. From ground-up construction projects to retail renovations and remodels to national rollout construction programs, we’ve seen and done it all. We know how important timeliness and accurate estimates are to you and your lender during the commercial construction loan process. Luckily, Diamond Contractors is dedicated to delivering the highest quality experience to our customers every step of the way. Let our experts help you get the answers to all your questions. Give us a call or reach out online today. We’ll show you the Diamond Standard.