What is it? (plain English)
A ground-up construction loan is short- to mid-term, business-purpose financing that funds building a new structure — often covering land and the full build — released in stages on a milestone-based draw schedule as the project progresses.
Who is it for?
Experienced builders, developers, and investors executing a defined build-and-sell or build-to-rent strategy.
When might it make sense?
When you're creating new inventory rather than buying existing — spec builds, infill, small multifamily — and need capital structured around construction phases.
Good to know
This is the most complex underwriting in private lending. Lenders look closely at plans, permits, budget realism and contingency, builder experience, land status, and the takeout. Draws are released against verified progress; interest is often charged on what you've drawn. Terms account for real-world permitting and build timelines.
Potential advantages
Funds the full build in stages; interest typically on drawn funds; lets you create the asset rather than compete for existing inventory.
Potential limitations
Highest complexity and execution risk; cost and timeline overruns; permitting delays; requires experience and contingency; the takeout must be planned in advance.
Documents you may need
Plans and specs, permits/entitlement status, detailed budget, builder résumé, land/title, pro forma, as-completed valuation, entity documents, insurance.
Questions to ask before you choose
- Are permits in hand?
- Is my budget realistic with contingency?
- Is my experience sufficient for this build?
- Is the land owned or financed?
- What's my takeout — sale or refinance?
How Kyon helps
We help you structure capital around your real timeline, plan the takeout before you break ground, and — where it fits — fund directly.