Raw Commercial Land Loans
Finance the purchase, refinance, carrying period, or predevelopment phase of qualifying undeveloped commercial land. Direct Private Capital Group, Inc. assists investors, developers, business owners, property owners, and brokers with organizing qualified business-purpose land-loan scenarios and presenting them to potential financing sources. Each transaction is reviewed individually based on the property, zoning, access, utilities, borrower, equity, requested structure, and repayment plan.
Business-purpose and investment-property transactions only. Financing is subject to underwriting and is not a commitment to lend.
What Is a Raw Commercial Land Loan?
A raw commercial land loan is business-purpose financing secured by undeveloped land intended for a commercial, investment, or development use. Review commonly focuses on the property’s current condition, legal access, zoning, utilities, environmental characteristics, marketability, borrower equity, development plan, and a realistic method for repaying or refinancing the loan. It is one type of commercial real estate financing.
Why Is Raw Commercial Land More Difficult to Finance?
Raw land is different from an occupied commercial building because it may have no tenants, rent roll, operating history, or net operating income.
- What use is legally permitted today?
- Is the parcel accessible from a public or legally documented private road?
- Are water, sewer, electricity, gas, drainage, and telecommunications available?
- Does the parcel require rezoning, subdivision, annexation, or entitlement approval?
- Are wetlands, flood hazards, contamination, easements, or topographic constraints present?
- How much cash or other equity is the borrower contributing?
- How will the loan be repaid if development or resale takes longer than expected?
A bridge loan may be relevant for a time-sensitive acquisition or maturity, while construction financing may be more appropriate once vertical construction is ready to begin.
What Can Raw Commercial Land Financing Be Used For?
Potential business-purpose scenarios include:
- Land Acquisition
- Time-Sensitive Purchase
- Land Refinance
- Limited Cash-Out Refinance
- Entitlement or Predevelopment Period
- Future Owner-Occupied Business Site
Financing for a future owner-occupied site may involve different rules from investment-property financing. The borrower should clearly disclose the intended occupancy and business use at the beginning of the review.
When Might Another Financing Structure Be More Appropriate?
Raw commercial land financing is not the right structure for every transaction. Construction financing may be more appropriate when plans, permits, budget, contractor, and a construction schedule are ready. Bridge financing may fit a defined short-term transition. Broader commercial real estate financing may be more suitable when the property is improved and income-producing.
The correct structure depends on the property’s current condition, the stage of the business plan, the use of proceeds, and the proposed repayment source.
What Types of Commercial Land May Be Considered?
Raw or Unentitled Land
Raw or Unentitled Land
Entitled Commercial Land
Entitled Commercial Land
Commercial Infill Lots
Commercial Infill Lots
Rural or Exurban Commercial Land
Rural or Exurban Commercial Land
Development Land
Development Land
Future Owner-Occupied Sites
Future Owner-Occupied Sites
How Is Raw Commercial Land Evaluated?
There is no single approval formula for all raw commercial land loans. Underwriting usually combines property analysis, borrower review, business-plan review, and transaction-specific due diligence.
Current Zoning and Permitted Use
Entitlements and Development Approvals
Legal and Physical Access
Utilities and Infrastructure
Parcel Configuration
Flood and Wetland Conditions
Environmental History
Marketability and Demand
Flood and wetland screening should begin early because these conditions can affect usable acreage, insurance, permits, access, development cost, and marketability. Review the FEMA Flood Map Service Center and the U.S. Fish and Wildlife Service Wetlands Mapper for preliminary screening. These resources do not replace project-specific engineering, jurisdictional review, or professional reports. Environmental due diligence may also include the EPA All Appropriate Inquiries framework.
Which Financial Measurements May Affect Raw Land Financing?
Loan-to-Value Ratio
Loan-to-value, or LTV, compares the proposed loan amount with the property value accepted for underwriting.
Formula
Proposed Loan Amount ÷ Accepted Property Value = LTV
The accepted value may reflect the land’s current condition rather than a future value dependent on uncompleted approvals.
Loan-to-Cost Ratio
Loan-to-cost, or LTC, compares the proposed loan amount with eligible acquisition, entitlement, infrastructure, or project costs.
Formula
Proposed Loan Amount ÷ Total Eligible Project Cost = LTC
Recognized costs depend on the transaction and financing source.
Debt Service
Debt service is the required principal, interest, and other scheduled loan payments. Raw land may require an outside repayment source because it often produces no current income.
Carrying-Cost Review
The borrower may need to document funds for interest, taxes, insurance, legal work, engineering, maintenance, utilities, and entitlement expenses.
Net Developable Acreage
Gross acreage may be reduced by wetlands, flood areas, slopes, easements, setbacks, roads, stormwater facilities, or other constraints.
Usable-Acreage Note
Valuation and development analysis should distinguish gross acreage from land that can realistically support the proposed use.
As-Is and Prospective Value
As-is value reflects the property’s current condition. Prospective or as-complete value depends on stated assumptions about approvals or improvements.
Valuation Note
A future value should not be treated as current value. The appraisal scope depends on the property and financing request.
Cost Basis and Reserves
Cost basis may include purchase price and documented capital improvements. Reserves may support interest, taxes, insurance, maintenance, and approved project costs.
Transaction-Specific Review
Recognized costs, required equity, and reserves vary by property, borrower, loan purpose, and financing source.
No maximum LTV, LTC, loan amount, rate, term, minimum credit score, or closing time is represented on this page because those terms require current, transaction-specific verification. Raw commercial land is reviewed according to the property, borrower, equity, use of proceeds, valuation, and exit strategy.
What Documents Should Be Prepared?
A well-organized submission helps a financing source understand the parcel, current use, zoning, access, utilities, borrower, requested loan purpose, and proposed exit. Review DPCG’s commercial loan required-documents guide, loan requirement FAQs, and borrower FAQs for additional preparation guidance.
Initial Loan Scenario
- Property address or parcel location
- County, state, parcel number, and acreage
- Current zoning and intended use
- Purchase or refinance request
- Requested loan amount
- Purchase price, estimated value, or existing debt
- Borrower equity and requested closing date
- Use of proceeds and exit strategy
Property and Land Documents
- Deed, legal description, assessor record, and parcel map
- Survey, title report, and easement documents
- Aerial map, site photographs, and zoning verification
- Access documentation and utility availability information
- Environmental reports, flood information, and wetland information
- Soil, geotechnical, drainage, or engineering reports
- Appraisal or broker opinion of value, when available
Entitlement and Development Documents
- Approved site plan or concept plan
- Preliminary or final plat
- Zoning approvals, variances, and conditional-use permits
- Development agreement and annexation documents
- Utility commitment letters and traffic studies
- Civil, grading, drainage, or stormwater plans
- Permit list and approval-expiration schedule
- Development budget and project timeline
Borrower and Guarantor Documents
- Completed commercial financing application
- Personal financial statement
- Schedule of real estate owned
- Liquidity evidence through a secure process
- Business financial statements
- Experience résumé and project history
- Credit authorization, when required
- Explanation of material credit events
Business and Entity Documents
- Articles of organization or incorporation
- Operating agreement, bylaws, or partnership agreement
- EIN confirmation
- Certificate of good standing
- Ownership schedule and organizational chart
- Borrowing resolution
- Manager or member authorization
- Joint-venture or trust documents, when applicable
Financial and Exit Documents
- Current loan statement and payoff demand
- Promissory note and recorded mortgage or deed of trust
- Payment history and other lien information
- Sources-and-uses schedule
- Property taxes, insurance, and carrying-cost budget
- Bank statements through a secure process
- Sale, construction, or refinance exit documents
- Backup repayment strategy
How Does the Raw Commercial Land Loan Process Work?
Initial Scenario Review
Property, borrower, loan purpose, and exit overview
Preliminary Financing Discussion
Identify missing information and possible structures
Document Collection
Property, borrower, entity, title, and due-diligence items
Financing-Source Review
Present potentially eligible scenarios
Preliminary Terms or Indication
Subject to verification and underwriting
Formal Underwriting and Reports
Valuation, title, environmental, survey, and legal review
Conditions and Final Documentation
Resolve outstanding requirements
Closing and Post-Closing Obligations
Execute documents and maintain required covenants
What Can Delay a Raw Commercial Land Loan?
- Unverified zoning: The proposed use does not match current zoning or requires discretionary approval.
- No documented access: The parcel lacks public frontage or a clearly recorded and usable access easement.
- Utility uncertainty: Availability, capacity, extension cost, or timing has not been confirmed.
- Unsupported valuation: The requested value depends on future approvals, proposed construction, or weak comparable sales.
- Environmental concerns: Historical uses or visible conditions require additional review.
- Flood, wetland, or drainage constraints: Usable acreage or development plans are affected.
- Title problems: Liens, easements, restrictions, boundary disputes, or ownership inconsistencies remain unresolved.
- Incomplete borrower information: Liquidity, experience, credit events, or source of funds is not documented.
- Unclear use of proceeds: The request is not tied to a detailed business-purpose budget.
- Weak exit strategy: Repayment depends on speculative appreciation, uncertain financing, or an unapproved extension.
How Can a Borrower Prepare a Stronger Submission?
- Confirm the parcel information.
Verify the legal description, parcel number, acreage, and ownership. - Obtain current zoning information.
Provide written information from the relevant jurisdiction. - Explain the intended use clearly.
State what will be developed or operated and which approvals are in place. - Document access and utilities.
Separate confirmed facts from assumptions. - Provide a current land plan.
Include a survey, concept plan, site plan, engineering, or entitlement package when available. - Address environmental and physical conditions early.
- Prepare a complete sources-and-uses schedule.
- Explain the debt-service source while the land produces no income.
- Present a realistic timeline.
- Include a backup exit strategy.
How Does Direct Private Capital Group, Inc. Assist?
Direct Private Capital Group, Inc. serves as a commercial mortgage broker and private real estate financing resource.
For a qualified raw commercial land scenario, DPCG may assist by:
- Reviewing the initial request
- Organizing property and borrower information
- Identifying missing documentation
- Clarifying zoning, access, utilities, use of proceeds, and exit strategy
- Presenting potentially eligible scenarios to possible financing sources
- Communicating questions and conditions
- Helping the borrower understand document requests and next steps
DPCG does not guarantee that a loan will be approved, funded, or closed and should not be described as a direct lender, bank, debt fund, or owner of committed capital unless current transaction-specific evidence supports that description.
Discuss Your Raw Commercial Land Financing Scenario
Tell us where the property is located, the parcel size, current zoning, intended use, purchase price or existing debt, amount requested, borrower equity, requested closing date, and how the financing is expected to be repaid. Submitting information does not obligate you to proceed and does not create a commitment to lend.
Raw Commercial Land Loan FAQs
Undeveloped commercial land may qualify for business-purpose financing, but eligibility depends on the property, location, legal use, access, utilities, borrower qualifications, equity, value, and exit strategy. Financing is not guaranteed.
Not necessarily. Raw land often produces little or no operating income. The borrower may need to document another reliable source for interest payments, taxes, insurance, maintenance, and other carrying costs.
Possibly. The review should identify which approvals are completed, which remain outstanding, their expected cost and timing, and what happens if an approval is delayed or denied.
Rural or exurban commercial land may be considered, but location can affect valuation, comparable sales, access, utility availability, market demand, development feasibility, and resale liquidity.
A refinance may be possible when the borrower can document the current payoff, property value, lien position, payment history, use of proceeds, financial strength, and a credible repayment or exit plan.
The valuation normally examines the property in its current condition, including existing zoning, approvals, access, utilities, physical characteristics, restrictions, and market evidence. A future value may be considered separately but should not be treated as current value.
An appraisal or another acceptable valuation may be required depending on the financing source and transaction. Confirm the report type, appraiser qualifications, scope, and timing before ordering a report.
Environmental requirements depend on the property, prior uses, transaction, and financing source. A Phase I or other environmental review may be requested when contamination risk or liability must be evaluated.
Some financing structures may include approved business-purpose costs, but the borrower should provide a detailed budget, timeline, use-of-funds schedule, and evidence that the work is legally and practically achievable.
There is no universal closing period. Timing depends on the completeness of the submission, title, valuation, environmental work, survey, legal review, borrower conditions, financing-source requirements, and whether material issues arise.
Compliance Disclaimer
Direct Private Capital Group, Inc. is a commercial mortgage broker and private real estate financing resource. The information on this page is provided for general educational and informational purposes only. It is not a commitment to lend, loan approval, rate lock, guarantee of terms, guarantee of funding, or guarantee of closing.
Any financing is subject to underwriting; borrower and guarantor qualification; acceptable credit, equity, liquidity, and reserves; collateral review and valuation; confirmation of business purpose; title, survey, access, environmental, insurance, zoning, documentation, and applicable third-party review; state eligibility; financing-source guidelines; market conditions; and applicable law.
Business-purpose and investment-property financing only. This page does not offer consumer-purpose residential mortgage financing for personal, family, or household use.
Review the Privacy Policy before submitting personal information. For official fair-lending information, review the Consumer Financial Protection Bureau’s Regulation B resource.