What is a business entity construction loan and who qualifies?
Business entity construction loans are tailored financing products designed for real estate development companies, LLCs, corporations, and partnerships, with a proven history of success. These loans differ significantly from individual or consumer loans and are evaluated based on the entity’s structure, project experience, and financial capability.
At Marquee Funding Group, these loans are available only to entities with at least three completed development projects. The typical range spans from $750K to $5M, reflecting the needs of serious developers pursuing large-scale ground-up builds, multifamily assets, or commercial conversions.
If your development business operates as an LLC or corporation and has successfully delivered multiple projects, you’re likely an ideal candidate.
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Why lenders require specific documentation from LLCs and corporations
Lending to a business entity involves more complexity than lending to individuals. Lenders need to ensure that:
- The entity is legally structured and compliant.
- The decision-makers within the entity are authorized to borrow.
- The entity has clear ownership, financial stability, and legal standing.
- The experience level of the development team meets required thresholds. Learn more about our commercial lending approach for business entities.
By reviewing legal documents, tax records, and prior project history, underwriters can confirm that the borrower meets internal risk parameters. It’s not just about your current project; your documentation must prove the entity is viable, professional, and experienced.
The essential documents every entity must submit for a construction loan
To move through underwriting efficiently, business entities should be prepared with a complete documentation package. At a minimum, this includes:
Entity formation documents
- Articles of Organization (LLC) or Articles of Incorporation (Corp)
- Operating Agreement or Corporate Bylaws
- EIN assignment letter from the IRS
- Statement of Information (if required by your state)
Entity authorization and resolution
- Signed borrowing resolution authorizing the loan
- Certificate of Good Standing from the Secretary of State
- List of managing members or officers with titles
Financial and banking documentation
- Entity tax returns (past two years, if applicable)
- Current balance sheet and profit & loss statement
- Bank statements (minimum three months)
- Proof of liquidity (minimum 6 months of reserves recommended)
Project-specific paperwork
- Purchase contract or deed
- Construction budget and timeline
- General contractor agreement
- Draw a schedule and cost breakdown
This documentation provides a comprehensive view of the entity’s capacity to complete the project and repay the loan.
FIRREA, title, and survey: The three compliance pillars
Three critical components often overlooked by less experienced developers are FIRREA appraisals, title policies, and ALTA surveys.
- FIRREA-compliant appraisal: Required to meet federal guidelines and accurately determine “as-completed” value.
- Title insurance: Ensures a clean title and protects against liens or encumbrances that could jeopardize the lender’s position.
- Survey (ALTA/NSPS): Confirms lot boundaries, easements, and encroachments; these are vital for accurate loan underwriting and draw approvals. Failing to account for these early can cause delays or denials.
A lender like Marquee will often coordinate with title and appraisal vendors, but expects your team to initiate the process swiftly.
How experience and track record factor into your application
Marquee’s lending model centers around experienced developer business financing. That means entity borrowers must be able to demonstrate a minimum of three completed development projects, ideally of similar scale and complexity to the one currently being proposed.
Track record documentation may include:
- Project addresses and timelines
- Before-and-after photos or valuation data
- Construction completion certificates
- Profit and loss summaries or HUD statements
This data gives underwriters confidence in your team’s ability to execute. It also reduces the perceived risk of delays, cost overruns, or mismanagement.
Experienced developers who clearly document their history are often rewarded with faster closings, better draw terms, and access to higher leverage.
Common mistakes business entities make and how to avoid them
Even seasoned developers can make errors that slow down the lending process. Common pitfalls include:
- Inconsistent or outdated entity documents: Make sure your operating agreement matches the names and roles of current decision-makers.
- Missing borrowing resolution: If your LLC or Corp doesn’t formally approve the loan, the lender can’t proceed.
- Weak financial documentation: A strong balance sheet improves underwriting confidence. Provide updated numbers and avoid estimates.
- No clear project budget: A vague or overly simplified cost breakdown raises red flags. But if cost overruns occur during construction, understand your mid-project funding options.
- Overlooking insurance and compliance: Lenders need builder’s risk, liability, and sometimes environmental coverage upfront.
The solution? Treat your construction loan application like an investor pitch. Be thorough, proactive, and precise.
Why business structure matters in construction loan approvals
Lenders don’t just want to see that a borrower is legally formed; they want to know the structure supports long-term operational success.
For example, a manager-managed LLC with defined signatory authority reduces ambiguity during underwriting and draws.
Corporations with clear officer roles and proper resolutions signal institutional professionalism. On the other hand, loosely organized partnerships or outdated entity documents can create liability gaps or approval delays.
Structuring your entity for lending, not just for taxes, demonstrates foresight, enhances credibility, and ultimately accelerates approvals. The SBA’s business structure guide provides additional considerations for developers evaluating entity formation decisions.
Checklist: Construction loan documentation requirements for LLCs and Corps
Use this checklist to ensure your business entity is fully prepared before applying for construction financing:
Entity documents:
- Articles of Organization/Incorporation
- Operating Agreement or Bylaws
- EIN letter from IRS
- Certificate of Good Standing
- Signed Borrowing Resolution
Financials:
- Tax returns (2 years)
- Profit & Loss Statement
- Balance Sheet
- Bank Statements (3 months)
- Liquidity proof (6 months reserves recommended)
Project documents:
- Construction budget & draw schedule
- General contractor agreement
- Timeline and permits
- FIRREA appraisal (ordered or completed)
- ALTA survey (ordered or completed)
- Title report with insurance
Experience verification:
- List of past projects (addresses, dates)
- Completion documents or sale statements
- Visual/project documentation (if available)
By preparing this package upfront, your entity will stand out as a serious, ready-to-close borrower, the exact type of client that firms like Marquee prioritize.
Ready to apply for your business entity construction loan?
If your LLC or corporation has 3+ completed development projects and is planning a $750K–$5M construction loan, Marquee Funding Group is the experienced lending partner designed for you.
Get started now with Marquee Funding Group to secure business entity financing that matches your experience.