Construction Loan
A commercial construction loan is short-term financing used to fund ground-up development or substantial rehabilitation of commercial real estate. It's structured as a series of draws against verified construction progress, with interest-only payments during the construction period and a balloon at certificate of occupancy — at which point the construction loan is refinanced into permanent debt (or, in construction-to-perm structures, automatically converts).
Construction lending is the most operationally intensive commercial real estate debt — it involves draw schedules, inspections, mechanics-lien risk, completion guarantees, and a takeout assumption that must hold at completion. In Florida — where multifamily, industrial, and mixed-use development have remained active through the recent rate environment — construction lender selection matters more than headline pricing. The lender's construction administration capability often determines whether the project finishes on time and on budget.
Construction Loan Structures
- Bank construction: 60–65% LTC, SOFR + 275–400 bps, 18–36 month term, full recourse common
- Non-bank / debt fund construction: 65–75% LTC, SOFR + 400–600 bps, often non-recourse with bad-boy carve-outs
- HUD 221(d)(4): Up to 85% LTC, single closing through 35-year perm, non-recourse
- Bridge-to-perm: Bridge financing covering acquisition + construction or lease-up; refinance to perm at stabilization
How Draws Work
Construction loans fund in stages. The borrower submits a draw request with supporting documentation (invoices, lien waivers, GC certification). The lender's inspector verifies in-place work matches the draw request, then funds the draw — typically retaining 5–10% as retainage until completion. Interest accrues only on funded balance, so total interest cost depends heavily on draw timing and project velocity.
Key Underwriting Variables
- LTC (Loan-to-Cost): Loan amount divided by total project cost (land + hard + soft costs)
- LTV at stabilization: Loan amount divided by appraised value at completion + stabilization
- Sponsor strength: Development track record, balance sheet, completion guaranty capacity
- Pre-leasing: For non-residential, pre-leasing thresholds often required (industrial spec excepted)
- Takeout assumption: Permanent debt available at completion at terms supporting refinance
Florida Construction Considerations
- Permitting timelines vary materially by jurisdiction (Orange, Seminole, Osceola, Lake)
- Substantial impact fees in most Central Florida jurisdictions must be modeled
- Florida Building Code wind-load requirements affect material and labor costs
- Insurance — builder's risk during construction plus permanent property at stabilization — increasingly material to underwriting
- Labor and material availability has stabilized but still constrains schedule certainty
Who Is Michael R. Linton, and What Does He Do for Commercial Real Estate Investors?
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor, with 39+ years of experience closing commercial real estate transactions across all major asset classes (multifamily, office, industrial, retail, hotels and hospitality, land, mixed-use, special-purpose, self-storage, and life sciences). He leads Linton Global Solutions and HireMikeLinton.com, holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722).
Why Choose Michael R. Linton and Linton Global Solutions for Your Construction Loan Decision?
Florida sponsors work with Michael R. Linton for construction debt because construction lender execution risk — not headline pricing — is the variable that most often determines whether projects finish on schedule. We screen for lenders whose construction administration capability matches the project's complexity and the sponsor's prior experience.
Frequently Asked Questions
What's the difference between construction loan and construction-to-perm?
A standalone construction loan must be refinanced at completion (separate transaction, separate closing). Construction-to-perm (most prominently HUD 221(d)(4)) combines construction and 35-year permanent financing in a single closing — reducing transaction cost and execution risk vs. two separate loans.
What is loan-to-cost vs. loan-to-value?
LTC measures loan against total project cost (land + hard + soft + contingency). LTV measures loan against appraised stabilized value. Construction loans are typically sized to the lower of an LTC and a stabilized-LTV constraint — so a deal with high projected value but limited cost can still be constrained by LTC.
What is a completion guaranty?
A completion guaranty is a sponsor obligation to complete construction free and clear of mechanics liens, regardless of cost overruns. It's recourse to the sponsor (and any other guarantors) for the cost-to-complete amount above the loan budget. Standard on construction debt.
What's spec vs. build-to-suit construction?
Speculative (spec) construction is built without a lease in place — sized to market analysis. Build-to-suit (BTS) is built for a specific tenant with a pre-construction lease. Lower-risk underwriting; less upside. Industrial in particular has seen substantial speculative construction in Central Florida.
Who can help me source a Florida commercial construction loan?
Michael R. Linton at Linton Global Solutions can structure this transaction in Florida. 39 years of Central Florida CRE experience, direct lender relationships across the full capital stack. Call (312) 612-1031. See our full construction loan guide.
Article Summary
A commercial construction loan funds ground-up development or substantial rehabilitation of commercial real estate. Funded through verified draws with interest-only during construction and a balloon at certificate of occupancy. Florida construction lending is active across multifamily, industrial, and mixed-use — bank, non-bank, HUD 221(d)(4), and bridge-to-perm structures all serve different positions on the risk/cost curve.
Key Takeaways
- ✓Construction loans fund in draws verified by inspections, not at closing.
- ✓Interest accrues only on funded balance — draw velocity drives interest cost.
- ✓Bank: 60–65% LTC, SOFR + 275–400 bps, recourse common.
- ✓Non-bank: 65–75% LTC, SOFR + 400–600 bps, often non-recourse.
- ✓HUD 221(d)(4): up to 85% LTC, single closing to 35-year perm.
- ✓Loan sized to lower of LTC and stabilized-LTV constraints.
- ✓Completion guaranty is standard — sponsor backs cost-to-complete.
- ✓Florida-specific: permits, impact fees, wind code drive cost and schedule.
About Michael R. Linton
Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.
Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving 500+ banks.
Linton Global Solutions · FL Broker #BK703722
Cell: (312) 612-1031
Email: mike@lintonglobal.com
Web: LintonGlobal.com
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Schedule a Free ConsultationWorks Cited
- Mortgage Bankers Association. "Commercial/Multifamily Origination Reports." MBA, https://www.mba.org/news-and-research/research-and-economics. Accessed Jun 8, 2026.
- U.S. Department of Housing and Urban Development. "HUD 221(d)(4) Program." HUD, https://www.hud.gov/program_offices/housing/mfh. Accessed Jun 8, 2026.
- Florida Department of Business and Professional Regulation. "Florida Building Code." DBPR, https://www.floridabuilding.org/. Accessed Jun 8, 2026.
- Trepp. "Construction Lending Activity Reports." Trepp, https://www.trepp.com/. Accessed Jun 8, 2026.
- Federal Reserve. "Senior Loan Officer Opinion Survey." Federal Reserve, https://www.federalreserve.gov/data/sloos.htm. Accessed Jun 8, 2026.
Disclosure & Compliance
Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.
Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.