Construction loans

How long does applying for a commercial construction loan take?

Before applying for a loan, the borrower typically spends time researching potential lenders, understanding their loan terms, and gathering necessary documents such as financial statements, project plans, permits, and contractor bids. It can take 1-2 weeks.

Once the borrower has selected a lender, the formal loan application process begins. This may involve completing application forms, providing documentation, and paying application fees. The lender will review the application and determine whether to proceed with underwriting (1-2 weeks).

After that, the lender evaluates the borrower's creditworthiness, the feasibility of the construction project, and the collateral being offered. This process can take anywhere from a couple of weeks to a couple of months, depending on the complexity of the project and the lender's internal processes.

Once the loan is conditionally approved, the borrower and lender work together to finalise the documents. This may involve legal review and negotiation of terms. The timeline for this step can vary depending on the responsiveness of both parties and any complexities in the transaction and can take 1-4 weeks. Signing the final documents and disbursing the loan funds can take 1-2 weeks.

Overall, the entire process from application to funding typically takes anywhere from a few weeks to several months.

Business loan calculations for 3 years (example)

How do I calculate my future borrowing expenses?

Start by estimating the total amount you need to borrow for the construction project. This should include all expenses related to land acquisition, construction materials, labour, permits, fees, contingencies, and any other associated costs.
Consult with your lender to determine the interest rate for the construction loan. This rate may be fixed or variable and can vary based on market conditions, your creditworthiness, and the lender's policies.

Construction loans typically have a relatively short term, ranging from six months to three years. You may make interest-only payments or incur other financing arrangements during this period. Determine the loan term that aligns with your project timeline and financial needs.

During the construction phase, you'll typically make interest-only payments on the loan's outstanding balance. Be aware of any fees associated with the loan, such as origination fees, processing fees, appraisal fees, closing costs, and other administrative charges.

It's also wise to include a contingency fund in your borrowing calculations to account for unexpected expenses or cost overruns during construction. A contingency of 5% to 10% of the total project cost is recommended.

What factors affect the approval of business construction loan applications?

Here are some key factors to consider:

• Credit History
• Business Financials
• Construction Project Feasibility
• Collateral
• Loan-to-Value Ratio (LTV)
• Business Plan
• Experience and Expertise
• Market Conditions

See the similar FAQ about Australian banks:

• CBA margin loan
• Commbank novated lease
• Commonwealth Bank solar rebate
• Drive online from Westpac Bank
• NAB business markets loans

Details of companies offering the financial services:

ANZ Bank

Head office’s address: 833 Collins Street

Contact center: 13-13-14

Phone: 61-3-9683-9999

Mail address: 833 Collins Street Docklands, Melbourne

Web-site: http://www.anz.com

Swift code: ANZBAU3M

Financial institution code: ANZ

Stock code: ANZ

ABN: 11 005 357 522

BSB: 015-891

Bank of Melbourne

Head office’s address: 525 Collins Street

Contact center: 61-132266

Phone: 61-3-9982-4186

Mail address: 525 Collins Street Melbourne

Web-site: https://www.bankofmelbourne.com.au/

Swift code: SGBLAU2S

ABN: 33 007 457 141

BSB: 193-879

Bank of Queensland

Head office’s address: 100 Skyring Ter

Contact center: 61-1300-557-272

Mail address: 100 Skyring Ter L 6, Newstead, Queensland, 4006

Web-site: http://www.boq.com.au/

Stock code: BOQ

ABN: 32 009 656 740

BSB: 124-001

Beyond Bank Australia

Head office’s address: 100 Waymouth St

Contact center: 13-25-85

Phone: 61-8-8205-8888

Mail address: GPO Box 1430 Adelaide SA 5001

Web-site: http://www.beyondbank.com.au

Swift code: CUSCAU2S

ABN: 15 087 651 143

BSB: 805022

CommBank

Head office’s address: 201 Sussex Street

Contact center: 13-22-21

Phone: 61-2-8055-4001

Mail address: Level 10, Tower One, Darling Park, 201 Sussex Street

Web-site: https://www.commbank.com.au/

Swift code: CTBAAU2S

Stock code: CBA

ABN: 48 123 123 124

IMB Banking

Head office’s address: 47 Burelli St

Contact center: 61-133-462

Mail address: 47 Burelli St, Wollongong, NSW, 2500

Web-site: https://www.imb.com.au

Swift code: IMTIAU21

BSB: 641-800

NAB

Head office’s address: 800 Bourke Street

Contact center: 13-22-65

Phone: 61-3-8566-7023

Mail address: Level 4, 800 Bourke Street, Docklands, VIC

Web-site: http://www.nab.com.au/

Swift code: NATAAU3303M

Financial institution code: NAB

Stock code: NAB

BSB: 086-027

Suncorp Bank

Head office’s address: 80 Ann Street

Contact center: 13-11-55

Phone: 61-7-3362-2222

Mail address: PO Box A50 Sydney South NSW 1235

Web-site: http://www.suncorpbank.com.au/

Swift code: METWAU4B

ABN: 66 010 831 722

BSB: 484-799

Westpac Bank

Head office’s address: 275 Kent Street

Contact center: 13-20-32

Phone: 61-2-9155-7700

Mail address: 275 Kent Street, Sydney, NSW

Web-site: https://www.westpac.com.au/

Swift code: WPACAU2S

Financial institution code: WBC

Stock code: WBC

ABN: 33 007 457 141

BSB: 032-063