Whether you are building residentially or commercially, a metal structure can be cost-effective, eco-friendly, durable, low-maintenance, and offer you the ideal combination of functional and aesthetic value.
One of the most important steps of planning a metal building project is figuring out how to finance it. Alas, this can also be one of the most challenging aspects.
Whether you are looking for pole barn financing, barndominium financing, or financing to build another type of metal structure, this guide will explain some of the challenges you may face along the way. We will then introduce you to some top banks to consider for your project financing.
What Makes Getting A Loan for Metal & Steel Buildings Challenging?
In many respects, the challenges you will encounter when trying to finance a metal building are not too different from those you would deal with trying to finance another construction project.
- You may need a larger loan than you would for wood construction. Your initial outlay of costs may be higher since the materials tend to be more expensive.
- You might have a hard time finding a loan with a long enough term for your requirements, or sufficient loan-to-value.
- As with any other type of loan, lenders will consider your credit score and other aspects of your financial profile when determining how much to loan you and at what interest rate.
- You will need to walk into the application process with detailed building plans and a solid timeline. Ideally, you should already have approval on your plans. The more concrete and realistic your plans are, the less riskier they appear to be to a prospective lender.
- Not all banks and credit unions are all that familiar with the metal building niche. Those that are not may have a more difficult time assessing your project.
Options for Metal Building Financing
Where should you turn to get the money you need to turn your vision of a barndo or other metal building into a reality? There are a variety of different options you can consider, each with its pros and cons.
- A bank: One option for financing a metal building is to turn to a bank. A lot of banks do not know much about metal building financing, but you will find a few out there that have specialized experience in this area. If you have borrowed money in the past, there is a good chance you have worked with banks before, so you may be familiar with the overall process.
- A credit union: Just as there are banks that offer financing for metal building projects, there are also some credit unions out there that will do the same. You can check to see if any credit unions or banks in your local area will finance barndominiums or pole barns.
- A mortgage lender: There are direct mortgage lenders that operate independently to consider as well. Such a lender may not be part of a bank, but they can work with you to fund your metal building project. An independent lender may be more flexible than a bank, offering more personalized services. There is also no middle man, so sometimes you can find low fees by going this route.
- A mortgage broker: A mortgage broker is different than a direct lender. It is a third party that can connect you with a network of different lenders. Instead of searching for a mortgage on your own, you have the broker doing it for you, which saves you a lot of time. A broker might also be able to negotiate for more affordable rates than you might find on your own.
- An online lender: While you can work with a local or nationwide lender with a brick and mortar location, nowadays, you also have the option of going through a direct lender online. This may be a convenient option, and potentially an affordable and flexible one as well.
- An online lending platform: This option is similar to a mortgage broker, except that it is an online service that can connect you with different lenders. One of our recommended options for metal building financing falls into this category.
- A private lender: Another possibility is to borrow money to finance your metal building from a private individual rather than a company (i.e. peer-to-peer lending).
- Your savings: Last but not least, if you have significant savings, you could consider using them to finance your project to build a metal home instead of borrowing money. While that might sound unrealistic at first, if you research metal building costs, you will discover that a metal building kit can be surprisingly affordable.
Types of Loans Commonly Used for Metal Buildings
Here are several types of metal building loans you might encounter:
- One-time construction: You sign a single loan to construct your metal building which converts to a permanent loan after about a year.
- Two-time close construction: You close your construction loan first, and then your mortgage.
- Note modification construction: You begin with a development loan with a particular interest rate, and then switch to a new interest rate for your permanent loan.
You will need to do your research and consider your future financial plans and requirements. An expert lender could also provide you with insights that might help you to choose the right type of product for your needs. Just keep in mind you will get the best advice if you talk to a professional who specializes in metal building loans.
What to Bring for Financing Approval
To give yourself your best chance of getting approved for the financing you need for your barndominium or other metal building project, you will want to submit these items to the lender:
- Floor plans and blueprints with schematics
- A list of the supplies you will need for your project
- Information about the site you will be building on and what utilities are in place
- Documentation on any subcontractors you will be using and the bids or estimates they have given you
- Documentation on project approval from your local regulators, if you have it
Also, keep in mind that some aspects of applying for a metal building loan are the same as any other type of loan you might apply for.
So, before you apply, you should check your credit score and your credit report. The report may have errors in it (this is actually really common) that could be dragging down your score. You will want to contest those errors and take other steps to boost your score before you apply.
Your debt-to-income (DTI) ratio, your income, and your assets may also all be considered by a lender. Just as you can take steps to boost your score, you also can take steps to improve your DTI ratio.
As far as assets and income go, it might be helpful to provide bank statements in certain situations both to demonstrate your income (especially if you are not a traditional employee) and your reserves.
Top Banks that Finance Metal Buildings
Now that you know more about applying for a metal building loan, let’s take a look at some of the top banks that offer financing for metal building projects.
1. New Century Bank
One popular lender to consider for your metal building loan is New Century Bank. This bank describes itself as being “founded in Christian principles. We are dedicated daily to applying these principles to our relationship with you.” The company is based in Kansas, and was founded clear back in 1905. So, it has had well over a century to build a sterling reputation with borrowers in the area. There are locations in Belleville and Manhattan, KS.
Why Consider New Century Bank for Your Metal Building Project?
While some banks and credit unions might consider a metal building loan, New Century Bank enjoys working with customers who are looking to construct a metal home. This isn’t something that they do on the side—it is one of their main offerings alongside traditional home construction loans.
The company writes, “Post and steel frame and post and beam construction is our specialty … New Century has bridged the gap in mortgages for Post and Beam Barn homes so as to deliver the same financing as any other conventionally built home.”
In fact, there is even a position at New Century Bank called a “New Century Bank Post Frame Mortgage Specialist.”
So, when you call New Century Bank, you can ask for a consultation with such a specialist. That person will be a professional with extensive experience in assessing metal building project plans. You will need to bring a copy of your building elevation and floor plan with you.
This bank offers financing for:
- Post and steel frame projects
- Post and beam projects
- Barn homes
- Agricultural metal buildings
- … And more
Indeed, this bank excels with respect to flexibility, stating that they “try to accommodate more project styles than any other lender.”
So, if another lender has turned you down because of the specific type of metal structure you want to build, consider turning to New Century Bank.
You can download a metal building pre-qualification request application right from the website.
The Bottom Line:
If you are in the New Century Bank service area, this long-established local lender has the specialized expertise you need to finance your metal building project.
Regardless of the type of structure you are working on, they should be willing to accommodate your project. They can work with you on financing a residential or agricultural structure.
2. Acorn Finance
The next company we recommend for metal building loans is one that was founded far more recently than New Century Bank. Acorn Finance got started in 2017, and was founded by Giri Addanki.
Despite being a newer company, this online lending platform employs “senior executives with decades of banking and financial services experience.” Moreover, it has become a top lender for metal building projects within just a few short years. The company’s headquarters are in Sacramento.
Why Consider Acorn Finance for Your Metal Building Project?
Like New Century Bank, Acorn Finance has experts specializing in metal building financing. And since they are an online lending platform, you should be able to work with them pretty much regardless of the location of your project. Indeed, the site confirms that it can help borrowers throughout the US.
The company writes, “We offer metal building financing for all credit types.” This is great news if you are struggling to get a metal building loan elsewhere because of your credit score.
Acorn Finance also excels with transparency, offering the following details on loan terms and amounts:
“We offer financing options for metal buildings with terms up to 12 years and loan amounts up to $100,000. Many online lenders can deliver funds as soon as one business day on approved loans.”
That is great news, as it can sometimes be a challenge to secure loan terms of that length for metal building construction.
One more advantage of Acorn Finance is that this company is not an individual lender. As a lending platform, it behaves more like a broker, connecting you with a network of lenders.
That means that Acorn Finance can save you the legwork of reaching out to numerous lenders yourself for individual quotes.
The site can take care of that for you, bringing you back the most competitive offers.
Plus, platforms like this sometimes have access to deals from lenders that the public does not. So, that might help you to get an even better rate.
The Bottom Line:
As an online lending platform, Acorn Finance can connect you with a network of lenders no matter where you are located in the US.
In doing so, they can save you time and help you find a competitive rate and terms that suit your needs. They also offer long loan terms and can help you even if you do not have perfect credit.
You now know more about the process of financing a metal building project, including what you need, different options for funding, and challenges to overcome. You also have had a chance to learn about Acorn Finance and New Century Bank, our top recommended banks for metal building loans.