The primary objective of Ion Bank’s construction and land development lending is to provide financial support to experienced, financially sound builders and developers. Ion Bank’s emphasis is placed on experience, liquidity, asset quality and market demand.
Ion Bank invests the time needed to properly structure development and builder loans, utilizing terms and conditions, which are competitive in the market and meet the needs of the Borrower to help ensure a mutually successful project. Commercial development and builder financing programs are available to existing relationships as well as prospective experienced customers.
Ion Bank’s lenders bring over 100 years combined experience. Construction loans by nature carry a higher degree of risk as economic market conditions can change dramatically and demand can shift quickly. Successful construction financing depends upon the Lender’s knowledge of cost, market absorption, asset quality and awareness of the inherent risks associated with a specific project. The need for appropriate controls when funding collateral improvement is critical to the success of the project. Lien waivers, cost overruns, bond reductions and buyer contracts all play a significant role in the profitability and probability of success of a project.
Some key aspects Ion Bank considers:
Know your builder/developer This is very important. Does the builder have liquidity; what is their experience? Are they members of organizations such as Home Builders Association Incorporated? What is their reputation in the market? Are they able to manage to changes in the economy and demand? For example, the 2007 and 2008 recession, or more recently with the Coronavirus pandemic?
Market information Know the competition, what other projects compete with the builder or developer’s projects. Is the builder/developer familiar with building rules and regulations? Are they familiar with Town bonding requirements? Have they completed a comprehensive cost review? Have they submitted a construction timeline? Does their product compete in the market?
Develop a financing structure that works What is leverage? Will borrower funds go into the project first before the Bank’s or is funding pari passu? Does the structure adequately cover overruns? Reserves? Retainage? Are soft costs documented with proof of payment? Are third party site inspectors required?
Time is money It is imperative that progress payments be disbursed on a timely basis and that the project is balanced regularly, meaning available funds are enough to complete the project, to ensure completion.
Document your project Legal documentation is extremely important. Utilizing experienced legal, environmental, appraisal, architect and inspector representatives help to ensure the project’s success.
Ion Bank is a member of the Home Builders Association. Team Ion takes pride in understanding all aspects of the builder and development lending process. We constantly monitor market conditions and utilize our builder and developer relationships to aid in that process. We have formed excellent relationships with the top quality builders and developers in the New England Market. We utilize experienced Attorneys, Appraisers and Inspectors to help reduce the associated risks. As a Community Bank, Ion has been financing home building and development projects in Connecticut for many multiple decades. Our experienced lenders work side by side with builders and developers to ensure the projects we finance have the best chance at success.
Ion Bank is large enough to handle the market demand, yet small enough to ensure financing decisions are made timely and the Bank is there to support our borrowers and community. There is no greater feeling than being a part of a successful development or home builder project where the Bank, the builder and the buyer are all very satisfied with the completed project.
Joann Smith, Senior Vice President & Team Leader, Commercial Real Estate at Ion Bank has over 37 years of commercial construction real estate lending experience. She works closely with local businesses to develop and expand commercial relationships for new and existing customers, as a trusted advisor and partner to help them grow their business.
Ion Bank is a leading provider of financial business products and services you need to achieve your financial goals and are committed to building lifetime relationships and providing friendly, personalized service to every customer, every day. Joann is located at our 1751 Ellington Road, South Windsor office and can be reached at 959.255.8891 or jsmith@ionbank.com.