10/10/2026
Building a $10M project? Don’t expect a $10M loan.
Construction lenders typically evaluate a project using loan-to-cost. That includes the complete project budget—from acquisition and construction costs to architectural drawings, surveys, soft costs and other expenses required to reach completion.
The amount a lender contributes depends on its capital structure. A bank, private lender, debt fund or insurance company may each approach the same project differently.
For example, 65% loan-to-cost on a $10 million project would provide $6.5 million in financing. The borrower would need to cover the remaining $3.5 million.
Some lenders may provide 85% or even 90% loan-to-cost. At 90%, the lender would provide $9 million, leaving the borrower responsible for the remaining $1 million.
That gap may be covered through the borrower’s cash, equity investors, other capital contributions or, in certain situations, additional collateral.
Planning a construction deal? Let’s review your equity needs and capital stack.
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