Construction Loans Structure

AVANA Capital is a direct conventional Construction, Bridge and SBA 504 lender established to provide financing on flagged hotels and various other owner-occupied commercial real estate assets, as well as renewable energy projects. We pride ourselves on quick turnarounds with flexible financing solutions for projects that range in size from $5 million to $100 million. Our lending solutions promote economic growth by creating a positive impact in communities with job growth and sustainable energy development in the United States.

Two Years Interest-Only: Construction loans through AVANA Capital are uniquely structured so that the borrower only pays interest for the first two years.

This gives ample time for the project to be completed before monthly principal payments are added.

Low Down Payment: While conventional loans need as much as 30-35% for a construction loan down payment, our requirements have a low down payment.

Our construction loan down payments are between 10% and 20%, depending on the property type under the Construction to SBA 504 Program.

Can Include Closing Costs and Fees: Various construction costs, as well as closing and soft fees, such as architectural assessments, title insurance, and surveys, can be rolled into the loan. This structure enables you to keep more cash on hand during the construction process.

commercial construction loans

Our construction loans are generally short-term loans under the SBA 504 program. Additionally, our commercial construction loan rates start with the loan’s initial two years being interest only.

After the first two years, the principal is converted to a principal and interest payment over a 20-year to 25-year amortization period.

All construction loans are based on a floating interest rate both during construction and after construction, so owners typically refinance and obtain more favorable financing at a lower fixed interest rate amortized over a 25-year period.

Construction Loan Requirements

If you are an entrepreneur or business that is expanding or building out your commercial real estate, such as a hotel franchise or office building, construction loans from AVANA Capital can help you achieve your project’s goals.

The following are our construction loan requirements that you must meet for your loan to be considered:

  • A 10% contingency on total hard costs in the project.
  • A 5% contingency on total soft costs (and FF&E) in the project.
  • An interest reserve calculated over the construction loan period which is included as part of the total project cost.
  • SBA authorization prior to closing as well as meeting the minimum equity requirements.
  • Conventional construction loans may require up to 35% of the total project costs as the equity contribution.
  • The project must fall under one of the transaction categories, such as franchised territory expansion, listed below.
  • Additionally, the project must also focus on one of the eligible property types, such as those in the hospitality industry, listed below.

Generally, most construction loans that are approved with AVANA Capital also provide a secondary form of repayment that is unencumbered.

Additionally, in some cases, we may require additional cash collateral during the stabilization period. 

It is also recommended that the borrower has sufficient capital at the ready when they are considering a construction loan.

This capital is recommended to ensure that the borrower can properly cover any necessary up-front costs. An example of these costs can be seen specifically when investing in the hospitality niche.

Transaction Categories

  • Franchised Territory Expansion
  • Brand Conversions
  • Purchase or Refinance
  • Property Expansion and Renovation
  • Modular

Eligible Property Types

  • Hospitality
  • Assisted Living
  • Retail
  • Medical Offices
  • Franchised
  • Warehouse / Industrial
  • Self-Storage Facilities

Loan Builder

Construction Loan

Permanent SBA 504 Loans

The information provided by this calculator is intended for illustrative purposes only. AVANA Capital shall be under no obligation to fund any loan to the borrower unless and until it is satisfied with its due diligence review in its sole judgment and formal loan documents prepared by AVANA's counsel are executed and delivered.

Call Our Client Services Team