Welcome to Santa Cruz County Bank

Land and Construction Application Process – How it works
Prequalification

• Set initial meeting with one of our lenders to assess the project feasibility and review preliminary budget to determine land cost, hard costs, soft costs, contingencies and interest reserve.
• Provide Bank with an application package including project information, financial information and lending application disclosure forms.
• We will evaluate the financial package, experience of the contractor, and scope of the project.
• We will ask that you provide a prequalification letter for permanent mortgage financing.
• Once the Bank has determined that the project is feasible we will provide a written proposal and advise you as to what the next steps are. This will be dependent on the timing of the project and when you are likely to break ground.

Approval

• Once you have a final set of final plans plus a final cost breakdown and construction contract, an appraisal is ordered and formal underwriting begins.
• Approval typically takes five to ten business days from the time we get the appraisal. Loan closing is typically within five to ten business days of final approval.
• All loan approvals and loan documentation is handled locally by Bank staff that are experienced and know the local market.

Funding

Construction draws are typically submitted monthly and are consistent with the approved project cost breakdown/budget.
Funds are disbursed based on percentage of completion which is based on Bank’s inspection.
Draw Requests are typically funded within two to three business days depending on completeness of the information and timing of the inspection.
The title company may require endorsements with each draw which can add one to two days to the draw process.

Things you should know

• Do not begin any work on the property of any kind until the loan is in place (if at all possible). This impacts our ability to put construction financing in place due to outstanding lien rights of general and sub contractors.
• Make sure your plans and construction cost breakdown are final before the appraisal is ordered.
• Do not put construction financing in place until you are ready to pull permits and begin work. If you need a land development loan it’s more cost effective to borrow a smaller amount for assistance financing the land and wait to put a construction loan in place until you are truly ready for construction.
• Speak with an insurance agent about supplying the liability and course of construction certificates prior to close of escrow.
• Choose a reputable contractor who has a proven track record on similar projects.

Overview of our Construction Lending Programs

Land Loans – The Bank can lend up to 60%* (needs to be a buildable parcel with access to water, power, sewer/septic).

Single Family Residential Construction – The Bank can lend up to 65%* for speculative builds and 70%* for owner occupied requests.

Multi-Unit Residential – The Bank can lend up to 65%*.

Commercial – The Bank can lend up to 65%* for investment property and 70%* for owner occupied loans.

SBA – Financing is available for owner occupied commercial real estate which can allow up to 90%*.

* The above percentages are based on the lower of either the project costs or the appraised value. Appraised value is based on the land ‘as is’ for land loans or the ‘as if completed’ value for construction loans. Borrowers are required to have a minimum of 20% cash equity into the construction project.

Typical Terms:

• Land Loan: 12 month maturity with interest only payable monthly. Loans typically include up to 6 months of extension to be executed at the Bank’s discretion.
• Construction Loan: 12 month maturity with interest only payable monthly (typically paid directly from the interest reserve). Loans typically include up to 6 months of extensions to be executed at the Bank’s discretion.
• Loan rates are typically variable tied to the Prime Lending Rate. Rates vary based on the type of project, financial strength of the applicant and overall relationship with the Bank.
• Loan fees are typically 1% annualized.

The above terms are listed for discussion purposes only.

Final terms offered would be subject to full underwriting and loan approval by Santa Cruz County Bank.