Construction Loans
Discovery Bank provides construction financing for owner-occupied, owner-builder and developers of individual units, small tract developments and commercial/industrial properties.
- With a conventional loan, loan amounts are typically 75 percent loan to cost, 65 percent loan to value and a minimum debt coverage ratio of 1.2x after vacancy, reserve replenishment allowance, operating expenses and under normal economic conditions. A higher loan-to-value ratio can be approved with additional collateral.
- With an SBA 504 Loan, loan amounts are up to 90 percent loan to cost, 85 percent loan to value.
- Discovery Bank will provide a commitment for take-out financing once the project is complete.
- Terms are generally 12 months, with interest only payments, payable through an interest reserve.
Commercial Construction Loans
Description |
To construct commercial real estate property |
Maximum Term |
18 Months |
Collateral |
Secured by underlying real estate project |
Down Payment |
Minimum cash injection of 20% into the project |
Debt Coverage Ratio |
Property income stream must have a ratio of 1.25:1 after construction. |
Advance Rates |
Up to 75% of appraised value. |
Rates |
Variable; generally based on the Wall Street Journal Prime Rate plus a Bank determined spread |
Guarantee |
Loans to privately held corporations require the personal guarantee of all principals holding 20% or greater ownership interest. |
Residential Construction Loans
Description |
To construct single family, or one-to-four family attached residential dwellings. |
Maximum Term |
18 Months |
Collateral |
Secured by underlying real estate project |
Down Payment |
Minimum cash injection of 20% into the project |
Advance Rates |
Loan-to-value ratio may not excced 80% of the 1st $750,000 in appraised value, plus 65% of the next $500,000 in appraised value, plus 50% of the appraised value in excess of $1,250,000. |
Rates |
Variable; generally based on the Wall Street Journal Prime Rate plus a Bank determined spread |
Guarantee |
Loans to privately held corporations require the personal guarantee of all principals holding 20% or greater ownership interest. |
Inquire with one of our experienced bankers or contact Discovery Bank today, to determine whether a construction loan is right for you.