Funding Sources for Construction in New York
Finding sources of financing for construction projects can be challenging. Even developers with a proven track record of success, those who have multiple properties, and those with perfect credit can struggle to find the right source of financing for their projects. Here are some options you can consider when searching for financing for a construction project.
Explore Commercial Bank Options
Fortunately, New York is home to some of the largest banks in the country. Keep in mind before you get started, you should have a detailed plan in place for the property. Commercial banks tend to prefer to work with established developers who have a ready-to-implement development plan in place so make sure you are prepared to discuss the details of the project with a loan officer.
Pursue Private Financing
One of the options for construction financing that many developers pursue is with private lenders. These are typically wealthy individuals, or pools of wealthy individuals who make loans. One should expect to pay a significant premium for funds borrowed privately since these individuals tend to make fewer loans than banks therefore their profit margins are different.
Using Equity from Existing Property
For developers who have existing property which have equity, it may be possible to borrow money against those properties. In some cases, your lenders will allow you to take an equity line of credit against the property, while in other cases, they may prefer a second mortgage. Keep in mind, if the lender prefers a second mortgage, the existing property is at risk until the second loan is fully paid.
Overcoming Financing Challenges
While we have been discussing the options a developer may have for financing projects, there are significant barriers for those who are not project developers. Contractors and subcontractors often need financing to fulfill their obligations during a construction project. This applies regardless of the project type including office buildings, retail projects, and medical offices. Most contractors and subcontractors will require money to get the materials needed, pay the workers needed for the project, and have funding available for bonds and other surety the project may require.
Specialized Business Interests and Financing
Fortunately thanks to a great deal of outreach in the communities, there are many contractors and subcontractors who have the ability to bid and win projects based on their status. These businesses include veteran-owned, minority-owned, and disadvantaged business enterprises. Oftentimes, these contractors and subcontractors also face significant hurdles to obtaining financing.
When you are facing challenges finding financing for construction projects in New York, you should contact Capstone Credit Group. Capstone offers a variety of financial products that are suited for contractors and subcontractors. Some of the services we can provide include:
- Surety Bonding Assistance — We have used ClearPay™ to help qualified general contractors who need bonds to issue to a project owner.
- General Contractor Financing — We understand the need for working capital for projects you plan to bid on, or for projects you take on for your current client base. We can help you with both by offering unique financing solutions.
- Subcontractor Financing — When working on a project, you need capital available to meet your payroll obligations, purchase supplies, and pay normal operating costs. We understand there are often delays in completion of a task and payment for that task so we can help with single invoice financing.
One of the primary reasons why your first stop for funding construction projects in New York should be Capstone is we will customize a financing package that is designed to meet your unique needs. Since we have industry experience and knowledge, you can feel confident we can design a financing package that meets your needs. Contact Capstone today and talk with one of our professional representatives. We can be reached by telephone at (347) 414-9673.