Construction to Permanent Loan Texas: How Does the Process Work?

January 22, 2026

For business owners planning to build on commercial real estate, commercial financing is often just as complex as the construction itself. Between land acquisition, construction costs, and long-term planning, it’s easy to feel overwhelmed by loan options and terminology.

A construction to permanent loan is one financing approach that can simplify the process by combining multiple phases into a single structure. Understanding how this type of loan works can help business owners make informed decisions before breaking ground on a new facility, expanding current facilities, or acquiring new owner-occupied commercial property.

This guide outlines key details Texas business owners should understand about construction to permanent loans to support long-term growth. Discover key details about a construction to permanent loan Texas business owners need to know to support business growth.

What Is a Construction to Permanent Loan?

A construction to permanent loan is designed to fund both the building phase and what comes next, reducing the need for multiple loan applications and closings. This commercial real estate loan structure combines short- and long-term financing into a coordinated solution.

Combines a construction loan with follow-on financing.
Supports commercial construction projects from start to completion.
Helps reduce uncertainty around post-construction financing.
Typically structured to transition automatically after construction.

For business owners, this approach may help reduce administrative burden while offering a clearer financial roadmap as you venture into new commercial real estate opportunities.

Construction to Permanent Loan Texas: What’s the Right Fit?

Commercial construction requires careful planning, especially in local markets with growing demand for owner-occupied facilities. Some common business use cases for pursuing this option include projects that support long-term operations:

Building owner-occupied commercial real estate.
Expanding manufacturing, industrial, or office facilities.
Developing build-to-suit properties.
Investing in growth opportunities in your region of business operations.

This type of financing may allow your business to align construction timelines with long-term operational goals, ensuring you capitalize on growth opportunities in your Texas market.

The Two Main Phases of a Construction to Permanent Loan

Construction to permanent financing is built around two distinct phases, each serving a different purpose in the life of the project.

Phase One: The Construction Phase

The construction phase focuses on funding the build itself, from groundbreaking to completion.

Funds are used to pay contractors and suppliers.
Loan proceeds are typically released through scheduled draws.
Interest is usually paid only on funds that have been disbursed.
The loan amount is based on approved budgets and plans.

This phase ensures construction financing is available as work progresses.

Phase Two: The Post-Construction Phase

Once construction is complete, the loan transitions into the next stage of permanent financing while you occupy the space:

Construction financing converts to ongoing repayment.
Payments are based on the remaining loan balance.
The structure depends on the loan program.
Businesses gain time to stabilize operations.

This transition is designed to eliminate the need to secure immediate permanent financing at project completion.

How One-Time Close Construction Loans Work

Construction to permanent loans can be structured in different ways, and a one-time-close construction loan combines everything into a single closing:

One loan approval
One set of closing documents
One closing date
Financing planned upfront

Some lenders structure one-time-close construction loans to include a long-term permanent mortgage. At Texas Gulf Bank, our one-time-close construction loans transition into a mini-permanent mortgage rather than a traditional long-term permanent loan.

The Role of Lot Loans in Commercial Construction

If you have not yet acquired the land where you plan to build a new building or structure, you may need to start with a lot loan to secure the land. Lot loans may be part of your broader construction strategy:

Used to purchase commercial land.
May be refinanced into a construction loan.
Can be structured separately or rolled into construction financing.
Important for businesses acquiring property before building.

Early planning helps ensure lot loans align with the full project timeline, especially if you have a launch date in mind for when you need to be operational in the new or expanded space.

How Texas Gulf Bank Approaches Construction to Permanent Loans

As business owners move from research to decision-making, understanding how lenders structure construction to permanent loans becomes essential.

At Texas Gulf Bank, we offer one- time close construction loan solutions that transition into a mini-permanent structure. If you select our bank as your lending partner, you benefit from:

Single closing that covers both construction and post-construction financing.
Construction financing with monitored draws during the build.
Automatic transition to a mini-permanent loan after project completion.
Shorter-term post-construction financing designed to support business flexibility.
Relationship-based banking that focuses on your business needs.

Our approach supports businesses that want time to stabilize operations before pursuing long-term financing. We also ensure that financing timelines align well with commercial development timelines.

Next Steps With a Construction to Permanent Loan

If you’re planning a commercial construction project to help grow your business, it’s best to explore your options with a seasoned lender. A well-structured construction to permanent loan can simplify financing while supporting flexibility during growth.

Our local team is ready to discuss the types of construction to permanent loan options that Texas businesses use to support expansion and long-term success.

We are proud to work with business owners across the Southeast Texas Gulf Coast region to structure construction loans that may support growth, flexibility, and long-term success.

Start a conversation with our bank today. Let’s explore whether a one-time close construction loan with a mini-permanent mortgage aligns with your business goals.

All loans subject to credit approval