It’s time to renovate your space. The renovation plan truly embodies the next level of your business, and you’re excited to see what new opportunities come your way once your space has a facelift. The only problem? The upfront cost would break the bank without a renovation loan.
We get it: renovations are expensive upfront, even if they lead to increased revenue for years to come. Plenty of the small businesses we work with utilize small business loans to pay for renovations, repairs, and remodels.
After working with numerous local businesses on their budgets and loan extensions, our team has some insight into how to maximize a commercial renovation loan in Virginia. And this guide reveals it all.
What is a Renovation Loan?
Ok, so we have something to admit. There’s technically not a single “renovation loan.” Instead, many types of business loans can be used to conduct repairs, renovations, or a remodel of a commercial space.
Some of the most popular include:
- Owner-Occupied Commercial Mortgages: specific funds for buildings where at least 50% is utilized by the owner’s business
- Investment Property Mortgages: funds to invest or refinance investment properties, like office buildings or condo complexes
- Construction Loans: funds for new builds, build-outs, or renovations
- HUD Loans: government-backed loans for multifamily properties
- Short-Term Investment Real Estate Loans: loans to acquire and renovate a real estate property to sell the property after or repay the loan quickly
With any of these renovation loans, a business signs a contract with a bank, nonprofit, or government organization. This contract outlines the terms, interest rates, and when the money must be paid back.
Loans can also be state-specific, and some of our favorites in Virginia include:
- Virginia Small Business Financing Authority (VSBFA) Loan: Virginia-specific loan for businesses with less than ten million in revenue, less than 250 employees, or qualification as a 501(c)(3) nonprofit entity
- U.S. Small Business Administration Loan: federally-funded loan for small businesses operating out of Virginia
- SBA 504 Loan: a federally funded loan that’s intended to support renovation, maintenance, and remodelings specifically.
For a larger list of business loans in Virginia, check out the Virginia SBDC’s resource page.
Tips to Maximize
Receiving a business loan is a great first step, but it isn’t the only one to get the most out of your loan. You also want to work with a contractor who understands how these loans work, is budget-sensitive, and willing to collaborate on renovations so they stay within budget.
Without the right contractor, you could have an unfinished renovation when the loan expires. At least, that was the original case for Two Maids and a Mop. As soon as they started with their original contractor, they realized they’d made a mistake. The contractors created more construction problems, not less, until one day, he stopped showing up.
To find a company that would stay on budget, on schedule, and on-site, they searched yet again for a new contractor. However, their small business loan was about to expire. Fortunately, they found a contractor who not only did a great job but worked with them on filing for a loan extension.
Define your budget
Before searching for a contractor, you want to define a budget. You also want to clearly communicate that budget and find a contractor who is good at bringing business visions to life without breaking the bank.
Carlton Building Services, for example, has a track record of producing quality work within budget for various local businesses, including:
- Ruff House
- Kawaii Corner
- Aamoc Transportation
- Warriors for Life
- McCormick Law
- Jump Trampoline Park
- Pursuit
- Adele Diamond
- Norfolk Botanical Gardens
On budget and on time should be your primary concern when hiring a contractor. And a company’s track record speaks for itself.
Read the fine print
When signing contracts related to your business, always read the fine print. This applies to your small business loan terms and the contract you sign with a contractor.
At Carlton Building Services, we aren’t experts on what should be included in the terms of small business loans, but we’ve read enough to help clients file for extensions or understand the terms of their specific contracts when needed.
Plus, this guide from Become provides great insight on what a small business loan’s terms should be.
Partner with an Experienced Contractor
The final step to maximize your business loan is to partner with an experienced contractor. Ideally, you want someone who specializes in commercial construction. If you’re a tenant or a landlord renovating a unit, you’ll also want to opt for a commercial real estate contractor.
Signs a contractor is the right choice include:
- Solid communication skills
- Passion and expertise when they discuss the project with you
- Past project highlights that prove their expertise
- Familiairty with local construcion regulations
- A robust project management process
Choosing a Contractor
Choosing a contractor is never an easy decision, and it’s one that you should make slowly and carefully.
When analyzing options, consider:
- A contractor’s specialization: are they residential or commercial? Do they work on new builds or renovations? You want to find a contractor whose area of expertise aligns with your project.
- Communication style: only work with contractors whom you feel comfortable communicating with
- On budget and on time: for a successful project, find a contractor who has a proven track record of finishing on budget and on time.
- If they worked with small business loans before: finding a contractor who is budget-sensitive and understands how a small business loan works makes financial sense.
- Their locality: as a small business, you are engrained within your community. You want to find a contractor who understands and serves that community as well.
Finding the right commercial contractor is even easier for businesses in Virginia Beach, Hampton, Chesapeake, Newport News, Norfolk, Portsmouth, or Suffolk because Carlton Building Services works in these areas. Contact us for a free quote.
