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Guide to Commercial Construction Loans

Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. Purpose of Commercial Construction Loans Few project owners can put up all of the capital to pay for a commercial building project without borrowing from a bank or other lender. There may be several different sources of funds, different layers in the “capital stack,” that go into financing a commercial building project—often a combination of equity and debt. While certain stakeholders and investors contribute equity, our concern here is with the commercial construction loans that constitute the debt portion of a project’s financing. A commercial construction loan is a business loan obtained by a project owner to finance the construction or renovation of a commercial structure. Sources of Commercial Construction Loans Up to $5 million in construction financing can be obtained through one of the Small Business Administration’s commercial construction loan programs: CDC/504 loans or SBA 7(a) loans. Many project owners prefer to finance construction with a commercial construction loan from a bank they have an established relationship with. Even...

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Fire Resistive Construction Trends

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. Strategic Design for Fire Resistive Construction Years of drought in California brought the nation’s attention to the threat posed by wildfires. Of course, wildfires are not the only fire threat. Fires can originate inside structures as well. Certain design principles and fire resistive construction methods are employed today to keep the fire from gaining entry to a building and slow or halt its spread. In fire-prone areas, local building codes often mandate Type III-A protected combustible construction or better for new construction. Type III-A, according to the International Building Code, provides 2-hour fire resistance for exterior walls and 1-hour protection for the structural frame, floors, and ceilings. Keeping Fire Out The primary strategy for keeping fire out of a building is to deny it the fuel it feeds on. That requires the use of non-combustible materials on a building’s exterior. These include cement, steel, and masonry, among others. Windows and Skylights Fire-resistant construction requires heavy-duty glazing, which resists fire...

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5 Construction Types According to Building Codes

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. International Building Code (IBC) Categories The five IBC categories identify the level of fire protection provided by five types of construction. The construction type chosen for a structure determines important parameters such as the building’s: Permissible uses Maximum occupancy Square footage Proximity to other structures Placement of windows and exits Fire resistance Need for sprinklers Type I is the most stringent and Type V is the least stringent in terms of fire resistance. Additionally, each category is further designated as “A” or “B” for basic or enhanced protection. Construction Types & Building Codes Type I Construction Type I buildings are made of fire resistive and non-combustible materials (concrete and steel) and are rated as being able to resist fire for 2-3 hours. In general, high-rise and high-occupancy buildings are construction type I-A. Type I-A provides enhanced protection against fire—3 hours for exterior walls and structural frame, 2 hours for floor/ceiling assemblies, and 1.5 hours for the roof. Type I-B,...

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Surety Bonds for Heavy Civil Engineering

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. What Do Civil Engineers Do? According to the U.S. Department of Labor, heavy and civil engineering is considered a subsector of the construction sector. The Occupational Outlook Handbook published by the Bureau of Labor Statistics describes the role of civil engineers as “[To] conceive, design, build, supervise, operate, construct and maintain infrastructure projects and systems in the public and private sector, including roads, buildings, airports, tunnels, dams, bridges, and systems for water supply and sewage treatment.” Their work is not normally performed on buildings but rather on infrastructure. IIJA and Heavy Civil Engineering The Infrastructure Improvement and Jobs Act (IIJA) was signed into law by President Biden on November 15, 2021. It authorized $1.2 trillion in funding for transportation and infrastructure projects, with $550 billion of that figure allocated for “new” investments and programs. The remainder is earmarked for repairs and upgrades to existing transportation and infrastructure systems. This level of funding creates unprecedented opportunities for heavy civil engineering...

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IIJA Buy America Regulations Explained

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. What is the Build America, Buy America Act? The Build America, Buy America Act is part of the Infrastructure Investment and Jobs Act (IIJA), signed into law by President Biden on November 15, 2021. It set May 14, 2022, as the deadline for all federal agencies to make sure that the infrastructure projects they fund comply with the Build America, Buy America domestic preference requirements. In some cases, this means that the IIJA Buy America requirements will supersede earlier procurement guidelines. What Does “Domestic Preference Requirements” Mean? “Domestic preference” means that all construction materials used in IIJA-funded infrastructure projects must, with few exceptions, be made in the United States. The White House has clarified that to mean that at least the last two stages of the manufacturing process must occur in this country. IIJA domestic preference requirements apply only to construction materials. They do not apply to supplies or tools brought to a jobsite and removed before project completion...

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How Safety Records Can Affect Your Bond Capacity

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. What Is Bonding Capacity? The term “bond capacity” (also called bonding capacity) refers to the maximum amount of bond coverage a surety is willing to guarantee a contractor. There are two facets to bonding capacity: the maximum amount a surety will guarantee on a single construction project and the maximum amount a surety will guarantee altogether for multiple projects at the same time. These are referred to as single-job and aggregate bonding limits, respectively. Only active bonds count toward the limit. When the work is finished, or a bond expires without being renewed, the bond is closed out and no longer counts toward the contractor’s aggregate bonding capacity. Why Is Bonding Capacity Important? Bonding capacity is important because it puts an upper limit, or ceiling, on the number of projects and the size of the projects that a contractor can be bonded for concurrently. This may not be a major issue for contractors doing primarily smaller private projects, as...

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House Bill Set to Make Broadband Grants Nontaxable

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. What Is Broadband Internet? The Federal Communications Commission (FCC) is the federal agency charged with regulating interstate and international communications via cable, radio, television, satellite, and wire. Its mission is to promote connectivity and make sure the communications market is healthy and competitive. The FCC defines broadband internet in terms of data transmission speed. To qualify as broadband, download speed must be at least 25 megabits (Mbps) per second and upload speed must be 3 Mbps or more. What Is the Digital Divide? Many areas of the United States are underserved when it comes to broadband internet. The government maintains a broadband deployment map that shows, by census block, the level of broadband coverage throughout the country. However, the map is based on self-reported data from Internet service providers (ISPs), and they consider a census block covered if even one or two homes in the block have broadband internet. The research arm of Broadband Now, a data aggregation company...

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Construction Market Forecast in 2023

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. The Economic Environment in 2023 Any construction market forecast is based on the current macroeconomic conditions for the economy as indicated by measures such as interest rates, inflation, unemployment, spending, and so on. While the entire economy operates in the same economic environment, different industries and industry sectors may fare better or worse than others. So, forecasts for specific construction markets require analysis of current events, trends, and the likely impact of anticipated future economic conditions on each market. Coming into 2023, the biggest concern for the U.S. economy was the possibility of recession—which occurs when there is a simultaneous decline in gross domestic product (GDP), employment, and investment. The fear was–and still is to some extent–that the interest rate increases made by the Federal Reserve Bank to curb inflation, which is the sign of an overheated economy, would put the brakes on spending to the point of recession. However, as of this writing, the Associated Builders & Contractors,...

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Bottlenecks in Supply Chains: The Construction Industry Explained

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your construction bond needs. Supply Chain Disruptions When contractors estimate costs and bid on a project, they make certain assumptions about the lead times for certain materials and components. Availability, costs, and lead times all became far more difficult to predict during the global pandemic. Prior to that, bottlenecks in supply chains and disruptions tended to be limited to certain regions and were usually the result of extreme weather events and natural disasters, political instability and civil unrest, labor disputes, and so on. The supply chain disruptions that began in 2020 were not limited to individual countries or trade partners. Worldwide shutdowns intended to stop the spread of Covid-19 had the unintended effect of crippling international and domestic transportation of goods, including construction materials. Labor shortages, high fuel prices, natural disasters (such as Hurricane Ian in September 2022), and the war in Ukraine have had a devastating cumulative impact on construction supply chains. While it’s no longer common to see harbors clogged with...

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