If you’re undertaking a new construction project, it’s important to find ways to reduce total costs as well as increase value for your property. With labor and material shortages, construction costs have been increasing. In addition, with loan rates increasing, the cost of capital may also be higher than expected. The good news is that CPACE financing may be able to help you reduce some of the costs associated with your project by providing long-term, low cost financing.
You Can Use CPACE Financing to Help with New Construction Costs
Commercial PACE funding is a type of property assessed clean energy financing. It provides funding for specific systems and equipment for your property that reduce energy use. In some areas, you can also use CPACE financing for water conserving and building resiliency elements for your project.
Many people associate PACE with property renovations and rehabilitations. However, in many locations you can use CPACE financing for new construction as well. In fact, it can be a great alternative to traditional mezzanine financing. PACE funding can provide capital for both hard and soft costs associated with eligible elements of your project. For example, CPACE can help fund energy-efficient HVAC systems, low flow plumbing fixtures, or LED lighting systems. In many cases, it can even make up 20% to 30% of your project’s capital stack.
Therefore, if you’re considering new construction, check with our expert PACE lenders to see if your project qualifies and how much CPACE financing you can get for construction.
There are Several Advantages of Using PACE Funding
CPACE financing offers many advantages compared to traditional types of financing that you might use for your construction project. One of the main advantages of choosing PACE for new construction compared to mezzanine financing is that PACE often offers much lower rates. Rates are also fixed for the term of the loan, which can be up to 30 years.
In addition, PACE funding is non-recourse and transfers with the property. Therefore, if you sell the property after construction, then the PACE payments stay with the property in the form of an additional assessment on the property tax bill. Also, where appropriate, you can even pass these payments on to tenants who benefit from efficient fittings and fixtures in your building.
Specifically for construction, commercial PACE also offers interest only periods throughout construction. You can also defer payments for up to two years after construction to assist with cash flow.
Therefore, there are many reasons to consider CPACE financing for your construction project, including a low cost of capital, long-term financing, and transferability of the loan to tenants or property purchasers.
Experienced PACE Lenders at Stonehill PACE
At Stonehill PACE, we specialize in commercial PACE financing for all commercial asset classes. Our team works with you to find financing solutions for your needs, whether you’re embarking on a new construction project or making updates to an existing building. We can help you get financing without changing scope or costs for your project and assist you throughout the application and qualification process for property assessed clean energy financing. Contact us now to get started and get this attractive, low-cost financing solution.