A Blueprint for Construction Loans

BY: Paul Cardarella

If your business requires a physical location, one of the biggest dilemmas can be whether to build, buy, or rent. In truth, there is no one-size-fits-all answer to that question. The most important thing to remember is, the answer that's best for you and your business should be based on facts and not fear of the unknown.

Since buying and renting space tend to be a little more straightforward, let’s examine the option of new construction in order to fill in some of the blanks regarding the process.

Benefits of Building

While the events of the last year have made building materials more expensive, the costs of buying and renting have also gone up thanks to a competitive market. Relatively speaking, whatever you do is going to cost you more than in the past.

However, many of the benefits of building remain the same, including your ability to:

  • Customize for your needs. When building from scratch, you can tailor the design to your specific needs. 
  • Choose your location. New construction often gives you more control over your location. Take advantage of opportunities in specific communities or give your facility easy access to railroads or highways.
  • Control maintenance costs. A brand new building means modern facilities. Enjoy low or no short-term maintenance costs, so that budget expenditures can focus on strategic direction rather than operational upkeep.

Understanding the Process

If you're even considering building at some point in the next one month to five years, a meeting with your business banker can be very beneficial. In addition to helping you understand the financial side of your decision, we have also been through this process countless times before and can serve as a resource to answer questions and connect you to other experts. That meeting will help you consider things like:

  • Land use. Location is obviously a fundamental piece of your decision, but there are other issues that may impact your budget or timeline. If you're buying raw land, has it gone through the zoning process? We can put you in touch with the people who make those decisions. You should also know whether the land has been prepared to build on, if there is easy access to utilities, and how roads and traffic will add to or detract from your property location.
  • Building a team of experts. New construction requires partnering with a variety of experts – architects, civil and structural engineers, electrical contractors, plumbers, and more – to complete the project. We've worked with many of the area’s best builders and contractors, and can connect you with people who can help you get the space you want and need.
  • Loan options. In partnership with the Small Business Administration, State Bank of Cross Plains can offer a variety of commercial and business loan options. In fact, the SBA provides so many avenues and options to help companies own their buildings and facilities. From flexible down payment percentages, to the ability to lock in a portion of your loan at very low rates for up to 20 or 25 years, State Bank of Cross Plains can walk you through the variety of solutions available. Quite often, customers are surprised by the incentives and programs available to encourage business growth.

As the saying goes, “you don’t know what you don’t know.” A forthright conversation with your bank representative can help you start off on the right foot and follow through with fewer hiccups along the way.

Prepare to Impress

While you shouldn’t let preparation stand in the way of touching base with your bank, there are things you can prepare to make the most of your conversation. Ideally, you'll be ready to share and/or discuss the following:

  • Financial statements: These will give us background for offering suggestions.

  • Your Idea: It's helpful if you have a solid understanding of your goals and objectives for any new construction project. Whether you have financial reasons or a need for physical upgrades, you should understand why you need a new building and be able to explain the potential benefits and return on such an investment.
  • Your timeline: Is there a project or opportunity that you want to ramp up for? Do you need space ready in time for delivery of new equipment? Would you like to wait for a lease to run its course or to plan around a significant milestone?

The more information you can share, the better insight we can provide regarding options and opportunities. Ultimately, our goal is to serve as your partner and resource as you not only build your business, but also your team of trusted professionals to help you navigate the new construction process.

For more information about the full range of new construction loan programs available, contact State Bank of Cross Plains today. 


Paul Cardarella

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