How to Apply for a Business Construction to Mini Perm Loan

August 26, 2022

Is your Texas business on the cusp of tremendous growth in your industry? We often talk to companies in this situation that need to build a new facility or expand their physical footprint to seize the opportunity. The challenge is finding effective financing solutions that will help your company pay for construction without hurting ongoing business operations.

Our solution for this challenge is a mini perm construction loan. This type of business loan will allow you to purchase and build commercial real estate. We invite you to learn more about mini perm construction loans, the benefits they offer, and how to apply through Texas Gulf Bank.

What is a Mini Perm Construction Loan?

A mini permanent (or mini perm) loan is a type of short-term financing for construction loans and purchasing commercial properties. It provides the financial resources to pay off construction loans and cover the interim time when the business is acquiring customers and revenue during fast growth. Then, the construction loan is converted into a semi-permanent mortgage at a later time.

These business loans typically start as construction loans for a 12 to 18-month period and roll into mini-permanent financing with a 25-year amortization period (but generally with a term of 5 years or less), which should give companies ample time to increase their revenue.

Mini perm loans can be used for new construction, builds near completion, or buying investment properties with some renovations needed. These loans are available to cover the financing needs for a wide variety of property types including office parks, industrial warehouses, restaurants, shopping centers, food courts, or multi-family residential properties.

Through a mini perm loan, your burgeoning company will be able to secure needed financial resources at a critical time of growth.

The Benefits of Mini Perm Loans

Choosing a mini perm construction loan offers many benefits for companies that are looking to expand operations and build a secure future:

Ample time to build the infrastructure you need to support growth.
Reduced risk of defaulting on a new loan (since the business qualifies for the construction loan and mini-perm loan at the same time).
Opportunity to make interest-only payments during the construction phase to help support continuous business operations.
Lower interest rates and more favorable repayment terms compared to other types of commercial loans.

The question is, which types of companies are the ideal candidates to take advantage of these benefits? We generally provide loan financing options to companies that fit one of these profiles:

Retail centers (multiple tenants who pay rent to the owner/landlord).
Office warehouses (with a majority of property used as warehouse space).
Owner-occupied businesses (the business owner occupies the space where their business is located).

Does your business fit one of these situations? Mini perm loans will allow your business to have flexibility and strength at a time when it’s needed the most. Find out more about how to apply for this type of loan.

The Application Process for Mini Perm Loans

The first step in the mini perm loan application process is to assess your business need. We will evaluate your specific industry, the property being purchased, the planned use for the property, and the future revenue expectations.

For example, business owners that plan to occupy the property need to explain all facets of their business activity in the space. We will want to assess how you plan to generate revenue in an owner-occupied property since your company will not be able to depend as much on rent revenue from tenants as you would see in a non-owner-occupied property.

Consider this common example of what we would look for:

Current occupation of the space (e.g. currently occupied or empty land?)
Cash flow estimations
When the building (if any) was constructed
Any building renovations or building code updates
Current owners of the building and their experience

After the initial business and property evaluation, potential borrowers will need to provide the following documentation related to your business and the property including but not limited to:

Completed and signed loan application
Business and any guarantor(s) tax returns from the most recent 3 years
Business and any guarantor(s) financial statements from the most recent 3 years
Business operating statements
Revenue projections
Renter/Tenant information
Property information

After all of the required commercial real estate loan documentation has been submitted, our in-house loan review team will usually require 2-4 weeks to complete their review. We will then provide you with a final determination of whether your loan application has been approved for financing.

Because of our streamlined application process, approved borrowers will be able to quickly gain access to loan funds. Then, you can begin construction on the path to expanding your physical presence.

Reach Out Today About Mini Perm Loans

For over 100 years, Texas Gulf Bank has been a proud lending partner to thousands of companies across a wide variety of industries along the Texas Gulf Coast. Our commercial lending team is ready to help you take the first step towards securing a mini perm loan.

With decades of extensive lending experience and in-depth knowledge about regional business needs, we provide a top-quality banking experience for you and your business. Contact Texas Gulf Bank today to schedule a consultation about your needs in the market.

Our team is ready to provide you with more information about a mini perm construction loan. Get in touch with a local lender today to help you capitalize on a major growth opportunity.

All Loans Subject to Credit Approval