City Spotlight- Nashville: Beyond the Bachelorette
·Market Analysis
Construction financing funds ground-up development and major renovation projects. Stay current on lending conditions, deal structures, and market activity.
Construction loans fund the development of new commercial properties through periodic draws as work is completed. The lender disburses funds based on inspections of construction progress. Interest accrues only on the drawn balance, and the loan typically converts to permanent financing or is repaid upon project completion and stabilization.
Construction loans typically feature 18 to 36-month terms with extension options, floating rates at SOFR + 300 to 500 basis points, 60-75% loan-to-cost, and full personal recourse guarantees. Interest reserves are usually built into the loan to cover carry costs during construction. Pre-leasing requirements vary by property type.