General Loan FAQs
Here are answers to some questions frequently asked by borrowers when considering a fix and flip, rehab, or construction loan. If you have a question that isn’t answered below, don’t worry – just ask us!
Q: Is LYNK Capital a lender or broker?
LYNK Capital, LLC is a direct lender. We make our own underwriting decisions and fund loans with our own money.
Q: What loan documentation is required?
At the beginning of the loan process, we will typically ask for much of the same documentation that a bank would require; however, unlike a bank, we don’t ask for this documentation to look for reasons to say “no”. We use common-sense underwriting principles to examine the character, experience, and capacity of each borrower, and have flexibility in our documentation requirements. Your online pre-approval letter will contain the list of documentation requirements applicable to your loan request.
Q: Are there minimum credit requirements?
We base our approvals on the quality of the property, the experience of the borrower, and the overall likelihood that the project will be successful. While we do review credit history, it is not the primary component of our decisions, and many borrowers with damaged credit are able to be approved.
Q: What rates and fees are charged?
Rates and fees vary by loan type and parameters. To get your rate and price, complete our online pre-approval, which takes just minutes.
Q: Will LYNK Capital fund construction draws?
Yes – we routinely structure loans with construction draws for borrowers looking to perform renovations or improvements to the property. Subject to certain loan-to-value requirements, we will lend up to 100% of the cost of renovations.
Q: What rates and fees are charged?
The answer varies based on the parameters of the loan scenario. Your online pre-approval will contain information regarding the applicable rates and fees.
Q: In which states does LYNK Capital lend?
We currently lend in Delaware, Florida, Georgia, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia, and the District of Columbia.
Rehab & Construction Loan FAQs
Q: How is the construction or rehab budget factored into my loan?
If you have chosen to finance construction or renovation costs, the amount of the construction budget will be deducted from the funds disbursed to you at closing. For example, if your total loan amount is $200,000 and the construction budget is $75,000, only $125,000 will be disbursed at closing, with the balance held for future construction draws.
Q: Is a licensed general contractor required?
For new construction, yes. For renovation projects, it depends on the scope of work. If the renovations are minor, no building permits are needed, and you have documented experience with prior projects, the use of a licensed general contractor may not be required.
Q: How will construction or rehab funds be allocated?
During underwriting, you or your contractor will be required to submit a scope of work and draw schedule that identifies the cost of each task to be performed, and groups these tasks into draw requests. When the work in each draw request is complete, the specified cost of the completed work will be disbursed to you.
Q: What is the process for requesting a draw?
Upon the completion of work specified in the draw schedule, you may submit a draw request by completing LYNK’s Draw Request form. On this form, you will identify each item of completed work for which you’re requesting payment. We will then schedule an on-site inspection of your property, during which an inspector will confirm the accuracy of the draw request and validate that the amount of work actually completed matches the requested draw payment.
Q: How many draw requests may I make?
Most loans are structured with between two and four draw requests, though some more complex projects may have up to six (six is generally the maximum). Your loan fees at closing will be based on the number of anticipated draw requests and, if you exceed this amount, a fee will be charged for each additional draw.
Q: How long does it take to receive a construction draw?
Several factors determine the time needed to process a construction draw (such as access to the property, the accuracy of the draw request, etc.); however, provided that there are no issues, most draws are paid within three to five business days.
Q; What if the inspector finds issues during the inspection?
If the inspector notes any issues with the draw request, such as work not fully completed or work not completed in a satisfactory manner, the amount of the draw request will be reduced to match the amount of work actually complete. In such event, the uncompleted work may be included in a future draw request upon completion.
Q: May a draw request be made for up-front contractor deposits?
No – construction draws may be submitted for completed work only, and you may not draw from your construction or rehab loan to pay upfront deposits to contractors. As the property owner, you are responsible for the payment of any deposits required by contractors prior to the completion of work.
Q: What if my costs increase?
As the property owner, cost increases (whether due to overruns or changes in the scope of work) are solely your responsibility. While we strive to give you flexibility in the management of your project, LYNK is only responsible for disbursing the amounts budgeted for each item in the Draw Schedule. If specific items end up costing more, you are responsible for any difference between the actual and budgeted costs.
Additionally, at each draw request, we will validate that the remaining, undisbursed construction budget is sufficient to complete the project in accordance with the original scope of work. If the remaining budget is deemed to be insufficient due to cost overruns or other reasons, you may be required to pay a portion of the construction costs in order to bring the project back into balance with the construction loan.
Q: Will construction draws be paid to me or directly to the contractors?
In general, construction draws are paid to you as the borrower, though in some cases we may approve payments directly to contractors. In all cases, prior to releasing subsequent draws, evidence must be obtained (in the form of lien releases, etc.) that all amounts from prior draws have been appropriately paid to all contractors and vendors.
Q: What if I complete the project under budget?
If construction or rehab funds are still available after the project has been fully completed, we will disburse those funds to you, provided that the loan is not in default.
If you have a question that isn’t answered here, don’t worry – just ask us. We’d love to help make your next fix and flip, rehab, or construction project a success.