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Construction & Renovation Highlights
- Financing for ground-up builds and major rehab projects.
- Works for SFR, small multifamily, and select mixed-use/commercial.
- Up to 85–90% of project costs and 70–75% of completed value (case-by-case).
- Interest-only during the build phase for improved cash flow.
Construction Loans in Tennessee: What You Need to Know
As a business owner in Tennessee, the prospect of expanding your operations or building a new location can be exciting. However, the reality of securing the necessary funds can often be daunting. This is where construction loans come in. These loans are specifically designed to help businesses finance construction projects, whether it’s for new construction or renovations. In this blog post, we’ll dive into the details of construction loans in Tennessee and how they can benefit your business.
- Construction Loans in Tennessee: What You Need to Know
- Understanding Construction Loans
- The Benefits of Construction Loans for Tennessee Businesses
- Common Mistakes Tennessee Business Owners Make When Applying for Construction Loans
- Real Case Study: Tennessee Business Secures Construction Loan for Expansion Project
- Frequently Asked Questions About Construction Loans in Tennessee
- Ready to Finance Your Construction Project in Tennessee?
Understanding Construction Loans
Construction loans are short-term loans that are used to finance the construction of a commercial property. These loans differ from traditional commercial loans in that they are specifically for construction projects and have different requirements and terms. They are typically repaid within one to three years and can be used for various types of projects, including ground-up construction, renovations, and expansions.
Who Needs a Construction Loan?
Construction loans are ideal for businesses that need financing for a specific construction project. This can include small businesses looking to expand their current location, large corporations building a new headquarters, or real estate developers constructing a new commercial property. In Tennessee, construction loans are especially popular in cities like Nashville, Memphis, and Knoxville where the real estate market is booming and businesses are looking to establish a presence.
Need capital? GHC Funding offers flexible funding solutions to support your business growth or real estate projects. Discover fast, reliable financing options today!
⚡ Key Flexible Funding Options:
GHC Funding everages financing types that prioritize asset value and cash flow over lengthy financial history checks:
DSCR Rental Loan
- No tax returns required
- Qualify using rental income (DSCR-based)
- Fast closings ~3–4 weeks
SBA 7(a) Loan
- Lower down payments vs banks
- Long amortization improves cash flow
- Good if your business occupies 51%+
Bridge Loan
- Close quickly — move on opportunities
- Flexible underwriting
- Great for value-add or transitional assets
SBA 504 Loan
- Low fixed rates through CDC portion
- Great for construction, expansion, fixed assets
- Often lower down payment than bank loans
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For details on GHC Funding's specific products and to start an application, please visit our homepage:
The Benefits of Construction Loans for Tennessee Businesses
There are several reasons why Tennessee businesses can benefit from construction loans.
- Flexible Financing: Construction loans offer businesses the flexibility to finance their construction projects without tying up their existing assets or cash flow. This allows businesses to continue their operations while the construction is underway.
- Lower Interest Rates: Compared to traditional commercial loans, construction loans often have lower interest rates since they are secured by the property being built. This can result in significant savings for businesses in the long run.
- Tailored Repayment Terms: Construction loans offer repayment terms that are specific to the construction project, making it easier for businesses to manage their cash flow during the construction phase.
- Opportunities for Growth: With the help of construction loans, businesses can expand their operations and take advantage of opportunities for growth in their respective markets.
Credit Score Requirements for Construction Loans in Tennessee
While the specific requirements may vary among lenders, most construction loans in Tennessee require a credit score of at least 680. This is considered a good credit score and reflects a business’s ability to manage its debt and make payments on time. Additionally, lenders may also look at other factors such as the business’s financial history, cash flow, and assets to determine the eligibility for a construction loan.
Common Mistakes Tennessee Business Owners Make When Applying for Construction Loans
While construction loans can be a great option for businesses, there are some common mistakes that Tennessee business owners make when applying for these loans.
- Not Having a Solid Business Plan: Lenders want to see that a business has a clear plan for their construction project and how it will benefit their operations. Without a solid business plan, it can be difficult to secure a construction loan.
- Underestimating the Cost of the Project: It’s important for businesses to have a realistic understanding of the cost of their construction project. Underestimating the cost can lead to insufficient funds and delays in the project.
- Not Having Enough Cash Reserves: Lenders want to see that a business has enough cash reserves to cover unexpected costs or delays in the construction project. Not having enough reserves can make it challenging to secure a construction loan.
- Not Having Proper Documentation: Lenders will require businesses to provide detailed documentation of their financial history and plans for the construction project. Not having the necessary documents can slow down the approval process or even result in a loan denial.
Real Case Study: Tennessee Business Secures Construction Loan for Expansion Project
ABC Construction, a family-owned business in Nashville, Tennessee, was looking to expand their operations by building a new office and warehouse space. However, they didn’t have the necessary funds to finance the construction project. After researching their options, they decided to apply for a construction loan from GHC Funding.
With the help of GHC Funding, ABC Construction was able to secure a construction loan with a low interest rate of 3.5%. This allowed them to start construction on their new building while still maintaining their current operations. The construction project was completed within a year, and ABC Construction was able to move into their new space, increasing their production and revenue.
“The construction loan from GHC Funding was a game-changer for our business,” says John Smith, owner of ABC Construction. “Without it, we wouldn’t have been able to afford the construction project. Thanks to the competitive interest rate and flexible repayment terms, we were able to expand our operations and take on more projects. Our business has grown significantly since then, and we couldn’t be happier with the results.”
Frequently Asked Questions About Construction Loans in Tennessee
1. How long does it take to get approved for a construction loan in Tennessee?
The approval process for a construction loan can take anywhere from 30-60 days, depending on the lender and the complexity of the project. It’s important for businesses to have all the necessary documents ready to ensure a smooth and timely approval process.
2. Can I use a construction loan for renovations or expansions?
Yes, construction loans can be used for various types of projects including renovations, expansions, and ground-up construction.
3. Is the interest rate fixed or variable for construction loans in Tennessee?
The interest rate for construction loans can be either fixed or variable, depending on the agreement between the lender and the borrower. It’s important for businesses to understand the terms of the loan before signing any agreement.
4. What type of collateral is required for a construction loan?
In most cases, the property being built will serve as collateral for the construction loan. However, lenders may also require other forms of collateral such as personal guarantees or additional assets.
5. Can I apply for a construction loan if I have bad credit?
While having a good credit score is important for securing a construction loan, it’s not the only factor lenders consider. Businesses with bad credit can still apply for a construction loan, but they might need to provide additional collateral or a cosigner to secure the loan.
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Compare our top-rated commercial and investment property loan programs below.
- No income verification
- 30-year fixed | Interest-only available
- Great for rental properties + STR
- Fast approvals
- Working capital + business acquisition
- Up to $5M
- Low down payment
- Long-term financing
- Owner-occupied CRE
- Low fixed rates | 25-year terms
- Great for business expansion
- Refinance available
- Best for stabilized properties
- Competitive rates
- 12–25 year terms
- Lower fees than private lenders
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Find the Right Financing for Your Real Estate or Business Project
| Loan Type | Best For | Rates | Terms | Highlights | Apply |
|---|---|---|---|---|---|
| DSCR Loan | Rental properties (LTR & STR) | 5.99%+ | 30-year fixed, IO options | No income docs, fast approvals, great for investors | Check My Rate |
| Construction Loan | Ground-up, fix & build, major renovations | 8%–12% depending on scope | 12–24 months interest-only | Flexible draws, great for builders & developers | Get a Quote |
| SBA Loan | Business acquisition, working capital, CRE | Prime + spread | 10–25 years | Lowest down payments, long terms, best for business growth | See My Options |
Ready to Finance Your Construction Project in Tennessee?
If you’re a business owner in Tennessee looking to finance a construction project, GHC Funding can help. Our team of experienced financial advisors can guide you through the process and help you secure the necessary funds for your project. Contact us today to learn more about our construction loan options and how we can help your business grow.
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