Financing for modular outdoor cabinet wind-resistant projects

4 FAQs about Financing for modular outdoor cabinet wind-resistant projects

Is modular financing an unsecured loan?

As an unsecured loan, modular financing often comes with higher interest rates and lower loan amounts. Additionally, modular manufacturers typically discourage retainage as suppliers, further increasing developers' equity requirements, particularly in the early stages of the project. 1

Why do modular projects have higher interest rates?

As a result, financing available for modular projects was lower, requiring more equity investment from the developer. Often, the unsecured portion of the construction loan covering the modular work was underwritten against the developer's credit, resulting in higher interest rates.

How much does modular construction cost?

Module construction costs ranged from $100-$180 per square foot and $5,000-$10,000 per module for transportation and placement onsite. Combined with onsite construction, total project construction costs for modular construction were generally 5-10% less than site-built construction (range -20% to +10%).

Why do commercial lenders reject modular construction projects?

Given the capital-intensive nature of modular construction, regular progress payments are essential to maintain cash flow. Off-site progress verification and past instances of financial distress in construction result in some commercial lenders rejecting modular projects.