When a bank looks at any commercial construction loan request, especially a large request, they will usually look very closely at the general contractor. The first question the bank is likely to ask is whether the general contractor has the experience to complete the project. Construction loan applicants should be sure to include in their loan package both a CV and a sales brochure on the general contractor. As a lender, it is always impressive and helpful to receive a color glossy sales brochure on the general contractor with a description of the projects built by the general contractor and color photos of the completed buildngs. The construction lender will also ask whether the general contractor has the financial resources to cover any cost overruns and construction disruptions, like supply shortages, weather issues, and labor disruptions. The construction loan applicant should therefore include a financial statement on the general contractor. Most banks financing large commercial projects will require the general contractor to sign an AIA Fixed-Price Contract with the developer and then assign that building contract to the bank. Cost overruns are becoming serious concerns these days, with the cost of asphalt, steel, and land increasing at 15% annually. It is the financial responsibility of the general contractor to absorb these cost overruns. Therefore the financial strength of the general contractor is a very serious concern. You can find hundreds of commercial construction lenders on C-Loans.com.
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