While the Risks of Construction Lending May Be Less in a Number

While the risks of construction lending may be less in a number of respects than those associated with land acquisition, banks still require a premium in their lending rate as compensation for the risks involved. For construction loans, banks typically require a premium above LIBOR that ranges from:

A) 0-50 basis points
B) 50-150 basis points
C) 150-250 basis points
D) 250-350 basis points