Commercial Construction Financing in Canada

Construction Financing for Commercial Real Estate

We arrange commercial construction loans across Canada for developers, investors, and builder-operators. Whether you are building a purpose-built rental, a mixed-use development, or a commercial building for investment or owner-occupancy, we structure the financing around your project budget and timeline, then source competitive terms from lenders who are actively funding construction.

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Construction Financing Canada

Up to 75%

Loan-to-Value

$100k – $100m

Mortgage Amount

Interest Only

Amortization Length

Prime + 1% to 2%

Rate Estimate ⓘ

About Construction Lending

Why Commercial Construction Financing Needs a Specialist Broker

Commercial construction loans are not standard mortgages. Lenders are funding a project that does not exist yet, which means the underwriting is heavier, the documentation is more intensive, and lender appetite varies significantly by project type, market, and borrower experience. The lender you choose, and how your project is presented, directly affects the terms you receive.

Going Direct to a Bank

  • Your bank may not fund construction, or may only fund certain project types
  • You manage the full documentation package yourself, with no feedback on what lenders actually want to see
  • If your application is incomplete or poorly structured, it gets passed over
  • No competitive tension on rate, advance rate, or draw structure

Working With a Construction Financing Broker

  • Access to chartered banks, credit unions, CMHC, and alternative lenders who are actively funding construction
  • Your project budget, contractor package, and exit strategy presented in the format lenders expect
  • Competing term sheets compared side by side on rate, loan-to-cost, draw structure, and fees
  • One point of contact from initial review through draw management and permanent financing
Our Process

From Project Review to First Draw

Every commercial construction loan follows the same core path, but the documentation is significantly heavier than a standard mortgage. Here is how we manage the process.

Step 1

Tell Us About Your Project

We start with a conversation about your development: the site, the building, the budget, the timeline, and your exit strategy. We review your project plans, cost estimates, municipal approvals, and contractor status to determine which lenders are the right fit.

Step 2

We Structure and Package Your Application

We organize your project budget, architectural drawings, contractor package, market study, and financial statements into a complete submission. Construction lenders see dozens of applications. The ones that are professionally prepared, with realistic budgets and a clear exit strategy, get priority.

Step 3

Lender Sourcing and Negotiation

We present your project to the lenders best suited to your asset class, market, and loan size. As term sheets come in, we compare rate, loan-to-cost, draw structure, interest reserve, holdback terms, and fees, then lay your options out side by side.

Step 4

Approval, Closing, and First Draw

Once you select a lender, we coordinate the appraisal, environmental review, quantity surveyor report, and all remaining conditions. Once the loan closes, funding is released in stages as construction milestones are verified by an independent inspector.

Project Types

Commercial Construction Projects We Finance

From purpose-built rental apartments to industrial buildings and mixed-use developments, we arrange commercial construction loans for every major project type across Canada.

Multi-Family Rental Apartments

Purpose-built rental buildings of all sizes. One of the most active segments for construction financing in Canada. CMHC-insured construction financing is available for qualifying rental projects and can offer significantly better terms than conventional alternatives.

Condominium and For-Sale Developments

Condo towers, stacked townhomes, and freehold subdivisions. Lenders assess pre-sale coverage (typically 50% to 70% of units sold) before advancing construction funds. The loan is repaid through sales proceeds rather than a permanent mortgage.

Mixed-Use Developments

Buildings combining residential units with ground-floor retail, office, or hospitality. These projects require lenders who understand the different income streams, leasing timelines, and stabilization periods for each component.

Commercial and Industrial Buildings

Office, retail, industrial, and warehouse builds for investment or owner-occupancy. Loan sizing is based on the projected income of the completed building and the strength of any pre-leasing commitments.

Major Conversions and Repositioning

Converting an existing building to a new use (e.g., office to residential, industrial to self-storage). Typically financed as a construction loan during the renovation period, transitioning to a conventional mortgage once the building stabilizes. Bridge financing may also be used for shorter conversion projects.

Land Development and Servicing

Subdivision, servicing, and preparation of raw land for construction. Assessed on the strength of the end-use plan, municipal approvals, and the developer’s experience. Often structured as the first phase of a multi-stage financing plan.

Loan Types

Construction Financing Options

Not every construction project fits the same loan structure. We work across three main categories of construction financing to match the right capital to your project.

Conventional Construction Loans

From chartered banks and credit unions. Interest-only, draw-based facilities priced at prime plus a spread. Loan-to-cost of 65% to 75%. Terms of 12 to 36 months. Best for experienced developers with permitted projects and strong budgets.

CMHC-Insured Construction Financing

For qualifying purpose-built rental developments. Lower rates, higher advance rates, and the ability to roll the construction facility into a long-term CMHC-insured mortgage at stabilization. Longer application timeline but the most cost-effective structure available for eligible projects.

Mezzanine and Structured Financing

Fills the gap between the senior construction loan and the developer’s equity. Used when the senior loan does not provide enough proceeds to complete the project without committing more equity than the developer prefers. Secured through a second charge or equity pledge, at a higher rate reflecting the added risk.

Locations

Where We Arrange Commercial Construction Loans

We arrange commercial construction financing across British Columbia, Alberta, and Ontario, covering urban, suburban, and secondary markets where development activity is concentrated.

Commercial Mortgages in British Columbia

British Columbia

Commercial construction loans in British Columbia for multi-family, mixed-use, industrial, and commercial projects in Vancouver, Surrey, Victoria, Kelowna, the Fraser Valley, and markets across the province.

Commercial Mortgages in Alberta

Alberta

Commercial construction loans in Alberta for developers in Calgary, Edmonton, Red Deer, and surrounding markets. Alberta’s relatively affordable land costs and growing population base make it one of the most active markets for new development.

Commercial Mortgages in Ontario

Ontario

Commercial construction loans in Ontario for projects in Toronto, Ottawa, Hamilton, London, Kitchener-Waterloo, and markets across the province. Strong demand for rental housing and industrial space continues to drive construction activity.

Why Cedar Commercial

A Broker Who Understands Development Financing

Construction financing is not a commodity product. Lenders vary significantly in their appetite for different project types, markets, and borrower profiles. An experienced broker brings current knowledge of which lenders are actively quoting, what their terms look like, and how to present your project for the best possible outcome.

We Know Which Lenders Are Active

Some lenders fund multi-family but not speculative commercial. Others handle large urban projects but pass on suburban or secondary markets. Rates, advance rates, and draw structures differ across the market in ways that are not always visible to borrowers approaching lenders directly. We know who is quoting what.

We Package Your Application to Win

A construction loan application that includes a well-prepared budget, a credible cost estimate, a qualified contractor package, and a clear exit strategy will move faster and attract better terms. We build that package so your project gets the attention it deserves.

We Manage the Full Timeline

From initial document collection through lender approval, draw management, and permanent financing at stabilization. Construction deals are longer and more complex than standard mortgages, and we keep you informed on where things stand at every stage.

Frequently Asked Questions

A commercial construction loan is a short-term, interest-only facility that releases funding in stages as your project hits verified milestones. Rather than receiving the full loan on day one, an independent inspector confirms completed work before each draw is released. You only pay interest on the amount drawn so far, keeping costs lower in the early stages. Terms typically run 12 to 36 months, and the loan is repaid at completion through a permanent mortgage on the stabilized building, or through sales proceeds for condo and for-sale projects.

Most commercial construction lenders advance 65% to 75% of total project costs, including land, hard costs, soft costs, financing costs, and contingency. Lenders also apply a separate test against the projected completed value of the finished building, and the more conservative of the two calculations sets your maximum loan amount. Experienced developers with strong projects in established markets tend to qualify for the higher end of that range.

Conventional commercial construction loans are typically priced at prime rate plus 1% to 2%, with interest charged only on amounts drawn. CMHC-insured construction financing for qualifying rental projects offers lower rates. Rates vary by lender, project type, loan size, and borrower experience. We source competing term sheets so you can compare rates, fees, and structures side by side.

An interest reserve is a portion of the approved loan set aside to cover interest payments during construction, so you do not need to service the debt from outside cash flow while the project generates no revenue. The reserve is calculated based on your projected draw schedule, the loan rate, and the expected construction timeline. Lenders typically add a buffer for rate changes or schedule delays. If the reserve runs out before the project is complete, you will need to fund remaining interest payments from your own resources.

Construction loan applications require more documentation than standard mortgages. Key items include architectural drawings, municipal permits, a signed construction contract with a qualified general contractor, an independent cost estimate (quantity surveyor report), a detailed project budget with contingency, a market study, projected financial performance at stabilization, personal and corporate financial statements, and evidence of your equity contribution. We organize all of this into a complete submission package.

Yes, but with more conditions than an experienced developer would face. Lenders typically require a higher equity contribution (60% to 65% loan-to-cost vs. 70% to 75% for experienced developers), a strong general contractor with a proven track record on similar projects, solid personal financial strength, and a simpler first project. Bringing in an experienced co-sponsor or development partner is a common strategy for satisfying the lender’s experience requirement on a first build.

Take-out financing is the permanent mortgage that replaces your construction loan once the project is built and stabilized. Construction loans are short-term instruments, and lenders expect a clear plan for repayment before they will advance funds. For rental projects, the take-out is typically a CMHC-insured mortgage or conventional term loan. For condo projects, the take-out comes from sales proceeds. Having a committed or well-documented take-out strategy before you apply for the construction loan significantly strengthens your application.

The most common options are: funding the overrun from your own capital, drawing on a pre-approved cost overrun facility (if negotiated into the original loan), or raising supplemental financing from a private or mezzanine lender. If an overrun goes unaddressed and the loan is exhausted before the project is complete, the lender will typically stop advancing funds. Building a realistic contingency (7% to 10% of hard costs) into your budget from the start is the best protection.

Construction financing is for projects where the building does not yet exist or is being fundamentally rebuilt. Renovation financing is for improvements to an existing, operating property. The distinction matters because each uses different documentation, underwriting, and loan structures. As a general rule, if your renovation budget exceeds 50% to 70% of the existing property value, or if the building must be vacated to complete the work, most lenders will treat it as construction financing.

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