Ground Up Construction Financing in California
Building from the ground up requires specialized financing, and a lender network experienced with construction risk. At Commercial Capital Partners, we structure and source ground-up construction loans for commercial and owner-occupied projects throughout California, with a focus on the Inland Empire and Southern California markets.
SBA 7(a) Construction Loans
The SBA 7(a) loan program can be used to finance ground-up construction of owner-occupied commercial buildings. This includes the land acquisition, site work, hard construction costs, soft costs (architecture, engineering, permits), and working capital needed during the construction period. The loan transitions to a permanent loan upon project completion, providing a single, streamlined financing solution. Down payments are typically 10–15%, with permanent terms up to 25 years.
This program is well-suited for: gas station and car wash construction, medical and dental office construction, industrial and warehouse buildings, retail and mixed-use owner-occupied projects.
Conventional Construction Loans
Conventional construction-to-permanent loans are available for projects that may not qualify for SBA financing or exceed SBA loan limits. These programs are offered through our network of regional banks and private capital sources and can accommodate a wide range of project types and sizes. Construction draws are disbursed as work progresses, and the loan typically converts to permanent financing upon certificate of occupancy.
What We Finance
- Ground-up construction of owner-occupied commercial buildings
- New gas station and petroleum retail construction
- Industrial warehouse and manufacturing facility construction
- Medical office and healthcare facility construction
- Retail strip and mixed-use commercial construction
- Hotel and hospitality construction
Recent Construction Deals Closed
- $3,375,900 SBA 7(a). Ground-up construction of a gas station in Bakersfield, CA
- $2,750,000 conventional loan. Refinance of a hotel in West Covina, CA
The Construction Loan Process
Construction lending involves additional complexity compared to standard commercial real estate loans, including draw schedules, inspections, title updates, and contractor vetting. We work closely with borrowers, contractors, and lenders to keep projects on schedule and within budget. Our experience with construction transactions means we anticipate challenges before they become delays.
Start Your Construction Project
If you are planning a ground-up commercial construction project in California, contact Commercial Capital Partners early, before you break ground. Early financing planning allows you to structure your project correctly from the start. Call (909) 721-5915 or reach out online. We serve the Inland Empire, Bakersfield, Los Angeles, and all of Southern California.
Ground-Up Construction Financing: Commercial Construction Loans for New Development
Ground-up commercial construction financing is one of the most complex and relationship-dependent categories in commercial lending. Unlike a stabilized property acquisition with in-place income, a construction loan is underwritten against a project pro forma, a completed project value, a qualified development team, and a borrower’s financial strength — before a single dollar of revenue is earned. At Commercial Capital Partners, we source and structure ground-up construction loans for commercial, industrial, multifamily, and mixed-use projects throughout the Inland Empire, Southern California, and beyond.
Types of Projects We Finance
- Multifamily and apartment construction (5+ units through 100+ unit developments)
- Industrial and warehouse development (build-to-suit and speculative)
- Retail and commercial building construction
- Mixed-use development combining residential and commercial uses
- Office building ground-up development
- Medical office and healthcare facility construction
- Owner-occupied commercial construction for operating businesses
How Construction Loans Work
A construction loan is a short-term, interest-only credit facility that funds the hard and soft costs of building a commercial project. Rather than disbursing the full loan amount at closing, the lender holds the funds in a controlled account and releases them in draws as construction milestones are completed and verified by an inspector. Borrowers pay interest only on funds drawn, not on the full committed loan amount, which reduces carrying costs during the construction period.
Most construction loans carry terms of 12 to 24 months, with the expectation that the completed project will either be sold, refinanced into a permanent loan, or occupied by the borrower-owner. At loan maturity, borrowers convert to a permanent take-out loan based on the stabilized property’s income.
Construction Loan Parameters
- Loan-to-cost (LTC): Typically 65%–80% of total project cost (land + hard costs + soft costs)
- Loan-to-value (LTV): Typically not to exceed 70%–75% of the as-completed appraised value
- Term: 12–24 months (extensions available for project delays)
- Rate: Variable; typically Prime or SOFR plus a spread of 2.00%–4.00%
- Interest reserve: Many construction loans include a funded interest reserve to cover monthly interest payments during the construction period
- Recourse: Most construction loans carry full personal recourse; non-recourse available for larger projects with experienced sponsors
What Lenders Look for in a Construction Deal
Construction lenders evaluate four primary factors: the sponsor’s experience and track record, the project’s financial viability (projected NOI or sell-out value relative to total cost), the market conditions supporting the project’s exit strategy, and the borrower’s financial strength as a backstop.
Sponsors with prior successful ground-up development experience have a significant advantage in today’s lending market. Lenders want to see that the development team — including the general contractor, architect, and project manager — has delivered comparable projects on time and on budget. First-time developers can access construction capital, but typically need to bring in an experienced partner, pay a higher rate, or accept lower leverage.
Construction to Permanent Financing
One of the most efficient structures for owner-occupied construction projects is the “construction-to-perm” loan, which converts automatically from the short-term construction phase into a permanent term loan at project completion. This avoids the cost and transaction friction of a second closing. SBA 504 and 7(a) programs both offer construction-to-permanent structures for owner-occupant businesses, allowing a business owner to finance the construction of their facility with as little as 10% down.
Work With an Experienced Construction Lending Advisor
Construction lending requires lenders who understand development and developers who understand lenders. Commercial Capital Partners bridges that gap — we speak both languages and structure construction deals that work from first draw through permanent financing. If you have a project in development or pre-development, contact us early. The right financing structure can make or break a project’s feasibility. Call (909) 721-5915 or submit a pre-qualification to begin.
