Board Topic: Business Line of Credit small construction company in the Chicago area
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Business Line of Credit

Posted by: Guest_Mark Nov 20 2004, 08:57 PM
Hi, We own a small construction company in the Chicago area. We own 6 local properties with the following assets and debts.
Value of property = $2,845,000
Mortgage balances = $1,180,000
Equity = $1,665,000
What would be the best way to: #1 obtain a business line of credit to rehab more properties #2 obtain a business line to develop a small subdivision of 8 homes? Thanks, Mark

Posted by: loanuniverse Nov 21 2004, 11:38 AM
Mark:

Assuming that those properties are income producing {not land}, the best way to access the equity would be by refinancing them using term-loans. Lines of credit for the purpose you are describing are rare. Your ability to borrow will be negatively impacted if some of the properties are vacant as the lender is going to want to see cash flow to repay the debt.

The subdivision development financing that you want is usually done with a project specific construction loan. This means that there is no line of credit that survives after the project is done. Construction loans are very complicated, but there are several articles in this site about them.

Just so that you and anyone else that reads my posts know, My feedback is always centered around commercial financing. This means that when I talk construction loans, the answer will be in line to something like you want to do here. The feedback does not have anything to do with personal loans such as the one someone would get to finance their own house.
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