Contingency funds should be specifically included to provide for the degree of uncertainty that exists in the estimate. Construction interest and all other fees and costs such as construction insurance, legal fees, accounting, etc., should be included. To qualify for draws, a project must normally be built under one general contract which provides liquidated damages equal to loan debt service for delayed completion, full course of construction insurance, and a dual obligee, performance bond. Before an application is put together, a project manager and possibly a management team should be appointed to carry the project to completion. Careful scheduling and planning are critical to success.
Projects can easily fail for lack of adequate project management.
The WDLF loan evaluations include analysis of project construction and operation management. You may want to contact the Business Information Center for referral information about permits and licenses required for your project. The amount and type of loan security required depends on the borrower and type of project financed. A first lien on real estate is required security for all loans. Other security may include a first lien on assessments or other revenue pledged for repayment, and personal property financed by the loan.