Securing a large commercial construction loan is extremely difficult, time consuming, complex, tedious and requires a high level of expertise and experience (and we just love them). Graco Mortgage is one of the very few commercial lenders that has the knowledge and background to arrange substantial commercial construction loans and construction financing. Our commercial construction loans start at $1 million with no upper limit.

One of the distinguishing characteristics of commercial building construction is that the physical building has not yet be constructed, so initially, the full and final collateral does not yet exist. Therefore, the lender makes only partial construction loan disbursements, which of course the lender monitors very carefully. Prior to the release of the subsequent construction disbursements, the construction lender will verify that the last disbursement was properly used to cover the intended construction expenses and that all lien waivers have been received. Our construction funding sources consider many factors when underwriting a commercial construction loan, including the developers track record, the proposed developments proforma etc.

It takes a high-end brokerage with literally decades of experience, like Graco Mortgage to handle the extremely detailed and complex documentation needed for approval and funding of high-end commercial construction loans.

Purposes and Types of Commercial Construction Loans

Different types of commercial loans are available for a variety of purposes.


Commercial construction loans are used to build new commercial properties and to reconstruct, rehabilitate or upgrade existing commercial properties. If you scroll through the Lines of Business menu items on our website. You will see details of the numerous purposes for which commercial construction loans can be used. They include, Multifamily Loans, Office Building Loans, Hotel Financing, Hospital Building Loans, Mixed Use Development, Industrial Park Loans, Master Planned Communities Loans, just to name a few. When you  need commercial property loans in excess of $5 million with excellent construction loan interest rates. Graco Mortgage has the professional experience and network of funding sources to arrange the financing you require.


Commercial construction loans can be categorized by type, as follows:

Land Development Loans:  These are risky loans in that raw land will only collateralize a small percentage of the value of the developed land. Therefore, borrowers will often need to provide additional assets as collateral. Lenders look for developers with solid track records in order to grant this type of loan. Proceeds from the loan ca be used to clear land, install infrastructure (i.e., water, sewer, power), subdivide the land, and so forth.

Acquisition & Development Loans: These loans cover the cost to purchase and subsequently develop raw or partially developed land. Proceeds can be applied to pay for any improvements necessary before new construction begins.

New Construction Loans:  These are short-term loans, usually interest only. The term is commonly up to 18 months but can be extended for additional fees. Construction loans can be set up as revolving credit lines to fund separate construction loan states or separate properties in a multi-phased construction project.

Bridge Loans:  In some situations, a developer needs construction funding while still owing money on a previous project that is undergoing sale. A bridge loan is designed for this type of circumstance. The loan may require a lien on the property for sale to act as collateral for the loan. When construction is rehabilitation rather than a new construction, the existing property can also serve as collateral. Bridge loans are also temporary, with terms of usually a year or less, though longer terms can be negotiated.

Mini-Perm Loans: Mini-perm loans are temporary loans that typically follow the completion of ta construction project and the issuance of a Certificate of Occupancy for the new building. A mini-perm loan settles any remaining balance on a construction loan. It remains in place as the property stabilizes and generates income, usually for a period of two or three years beyond the initial construction loan.

Takeout Loans:  A takeout loan is a permanent mortgage on a commercial construction project that replaces the relatively short-term financing, such as a mini-perm loan. Graco Mortgage can provide the financing from commercial construction loan through mini-perm loan to takeout loan in a seamless and uninterrupted sequence.

Mezzanine Loans: Mezzanine loans are a mechanism to add financing to an existing construction project. It adds debt to the capital stack through subordinated debt that increases the borrower's leverage. For example, a mezzanine loan might increase the borrowers leverage from a 70% loan-to-cost (LTC) to an 85% LTC. Mezzanine loans typically charge higher interest rates and may have additional restrictive terms.

Commercial Construction