Steel buildings are a serious investment so whether it’s a new building or an extension of your existing metal building, the cost is an issue. You may be wondering how you’ll pay for this building and if it’s possible to get financing for steel buildings. We have good news for you!
Finance or Pay Out of Pocket
Some may consider financing out of pocket, but many will acquire a loan or some form of financing in order to get going.
Whether or not financing is right for you is a question for yourself and/or a financial advisor. We are neither of those things so please do your own due diligence with any financial decision. However, construction lending is a significant part of the metal building industry so thankfully there are many options available.
If you plan to use your building for commercial purposes, then be sure to take into consideration that you can likely write off the interest accrued as an expense. This makes financing a more enticing idea.
Loan Options For Construction Loans
There are a variety of financing setups available for steel buildings but we’ll look into the primary types of loans below.
Note Modification Construction Loan
As you get started in the construction phase the loan is disbursed. When you go past key milestones there is a rate of interest for the amount disbursed up to that point in time. Therefore at each point of disbursing, there is a “modification”. Once the project has been completed the loan may be converted “modified” to a mortgage rate and can even be a fixed rate for a few months. If you’re looking for a mortgage rate in Canada, try findabettermortgage.ca. If you’re looking for one in the united states, try this site.
One-Time Close Construction Loan
This type of financing may also be known as an “all in one” construction loan. In other words, once the amount has been agreed and approved, construction may begin. The loan after a certain set period of time is converted to a permanent loan or mortgage.
Two-Time Close Construction Loan
As the name suggests you will typically close two times on this type of loan financing. The first close happens for the loan for construction. It is at this point that construction begins as the funds are there as needed to complete the construction. This type of loan is also known as a bridging loan. The second close happens at the time of conversion or refinancing of your loan, to your mortgage.
Building Funding Options
Some metal buildings will only cost a few thousand dollars. This holds true as the metal building kits at times are set to be an affordable alternative to some other building materials. It is in this case, that it may mean just saving up some funds for a little while, as you do go through your planning, design, and building location and approval processes. There is nothing that says that you have to pay for everything outright. With self-funding at times – it just means to get enough in hand to get started and as your progress, pay for things along the way.
This type includes: Banks, Credit Unions, Other Lenders. With this type of funding, your credit rating will be a factor. Quite often it means that in order to get funding and the amount which you may need, your credit rating is important in determining the rate you receive. Along with this, some of these institutions may not be familiar with funding a metal building project as they’re less common than other types of construction. This could mean that you’d have to have a relationship with the financier from previous times in order to convince them to lend you for your project.
This type includes: Peer-to-Peer, Private, Online. The availability of online platforms provides the possibility of finding persons and other financing companies directly that may be willing to invest in your project. This may also offer some flexibility in terms and conditions as well.
The journey may not be easy at times and some people may face challenges along the way.
- The initial cost may be a bit higher as compared to the construction using other building materials. Remember over the long term, the cost is lower in comparison
- Your credit score and your financial profile history may impact how much you may access in loan amounts
- Not all institutions are familiar with metal building projects – and may present a bit more difficulty than others in approving your financing.
- The more realistic your plans – the less risky they appear to a lender and the better your financing options
This may also mean that the opportunity for unique and progressive ways to support and fund your metal building project can also be developed.
If you’re looking for financing options for your steel building project, please let us know about your building and financing needs. We’ll put you in touch with a friendly representative who can price your building and discuss financing for steel buildings.