How Commercial Rebranding Construction Loans Work
Rebranding is more than just activities for marketing promotions - it can apply to just about everything in a business - including construction. In commercial construction, rebranding typically means renovation for stores or even offices to keep up with the times and appeal to changing customer tastes. Usually, rebranding applies to multiple locations of the same business which all need construction rebranding renovation for brand consistency. Rebranding construction renovation can include elements such as signage, lighting fixtures, industry-specific equipment, flooring, wall colors, shelving, furniture and more. All of this can add up tremendously in costs. Luckily today there are loans available from the SBA (US Small Business Administration), such as 7(a) loans. But specifically how do commercial rebranding construction loans work? The 7(a) loan program is the SBA’s most popular loan program because it is flexible for usage and loan caps can reach up to $5 million. This makes it easier for businesses to rebrand and renovate and/or even purchase real estate. For these types of projects the SBA 7(a) loans are available in multiple disbursements as opposed to lump-sum payments. The loan model works for businesses who pay contractors and construction providers upon work completions. Due to the size of construction and renovation projects, these are among the highest SBA loans available in the 7(a) program. The multiple-payment structure of these loans helps reduce the risk of large loans and lump-sum construction projects. Some important documents which can and should be expected in loan contracts include agreements between borrowers and lenders stating that the borrowers won’t permit changes to approved plans unless there’s consent from the lenders. Construction changes for example could include desires to change water fixtures after the fact, or the discovery of a leak which is going to increase plumbing charges. Other documents for the loan could be proof of contractors’ insurance certificates - to prove that the builder carries worker’s compensation insurance. Other important documents include copies of project specifications and approved plans. These are all documents which are required by the SBA for the lenders to obtain. For a loan agreement to be complete, the borrower has to sign and date and “Authorization for Disbursement,” which displays the project budget status comparing total amount and amount remaining. A new form must be generated for each fund request. Also in the package should be all invoices and credit statements, inspection reports, lien waivers for contracted work, filled-out AIA forms (American Institute of Architects) for contracted work and potential change orders, completed W9s for vendors, and borrower’s contact/location and account info for sending money. There is additional documentation which is not required for SBA loans, but can help achieve approvals for faster loan disbursements. These include elements such as signed contracts from insured and licensed builders. These contracts should include description of work and the price total. Documentation can also include finished IRS W9 forms for independent contractors, and SBA 601, or Agreement of Compliance forms (for builders receiving over $10,000 for the project). These are the standard expectations and elements for SBA loans for commercial rebranding construction projects. Interested in more about commercial construction renovation? Read about Buildrite’s renovation services.