Profiting from Loans for Light Industrial Construction

For commercial building owners today, building trends are more important than ever. To keep up with commercial business demands, and the speed that modern technology allows, both building owners and tenants in business alike have to keep up with business trends. There is no excuse today to be miss- or uninformed. The data and info are easily available on the web to everyone who needs them. Business tenants need to know what their customers want, and what type of buildings they need to best service them. And building owners need to know what buildings are most in demand for their own occupants. One of the trending commercial building needs today is for “light industrial” buildings. But what is light industrial construction and what does it require? Profiting from Loans for Light Industrial ConstructionLight industrial buildings are different than other buildings in part because of their versatility. They are not just office buildings, nor are they traditional industrial manufacturing facilities. They are somewhere in between. Light industrial buildings can be built to be changed. Meaning they have properties of traditional manufacturing, warehouse and shipping, and office buildings, and yet can more easily be renovated later to be more of one than the other. Today’s technology allows for smaller, faster and more productive manufacturing equipment than in years past. Likewise, consumers today want products faster, and shipped directly to their homes. And there are ongoing problems with the U.S. transportation infrastructure – the roads – for these and other reasons. All of this grows the demand for light industrial buildings – where businesses can do light manufacturing and shipping from additional locations closer to customer orders. And since the trends also require business versatility – where, for example, more offices within a building may be required in the future than now – light industrial buildings are the perfect solution. But light industrial construction can cost more than just renovating a traditional commercial office building to allow for more offices. So how to fund that? The U.S. SBA has risen to the demand by providing various loan options. But their most popular is the 7(a) loan program. 7(a) loans are perfect for construction projects for a number of reasons. A big one inovolves the structure of loan disbursements and scheduling. SBA 7(a) loans can be for up to $5 million – but they are provided not in a lump-sum payment, but instead via multiple disbursements. There are various advantages to this disbursement model – particularly for construction projects. Commercial construction projects are massive – time and financially consuming. Therefore, construction projects are charged as work stages are completed in multiple payments over time – just as 7(a) loan disbursements are provided. Another major advantage to this business structure applies to situations such as revisions, change orders and additional fees. In traditional construction and renovation projects, there may be temptation on the part of the client to make unanticipated revisions to the construction plans halfway through the project. Of course these change orders and associated fees can definitely add up over time and drastically increase the original budget. 7(a) loan structures help mitigate all of this because the loans and fees are more fixed in their disbursements. The upfront contracts and expectations are structured on these disbursements and fixed budgets. This doesn’t mean that necessary, unforeseen revisions can’t be made – it just means that all parties must be involved and in agreement before they are executed. The lender and client must be in agreement, and additional paperwork signed, for additional funds loaned. All of this helps mitigate unnecessary work, costs and additional time. It is clear that there is demand – for now and in the future – for light industrial construction buildings. But there can be heavy expenses involved on the construction side. Luckily, with the U.S. SBA 7(a) loan program, the construction costs can be covered, business demand can be fulfilled for commercial tenant needs, and profit be achieved for building owners. Want more? Read about Buildrite Construction’s renovation services.