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Choosing the Right Loan for Your Development Project

June 05, 2023

A major aspect of any development project is selecting the right type of funding for your project needs. With the proper funding from the right lender, getting your development plans in motion can be a smooth process. Here’s a breakdown of three common development financing loans and how to choose the right one for your project.

Land Loan

A land loan, sometimes referred to as a ‘lot loan’, is used to finance the purchase of a plot of land. This type of loan is beneficial to developers who don’t have immediate construction plans but want to secure the land they plan to use in the future.

For developers seeking a land loan for their development, MCAP offers both conventional and high-ratio land acquisition loans for projects with short to mid-term development horizons.

Learn More About MCAP Land Loans

Land Servicing or Development Loan

When you’re at the point where it’s time to start building, installing utilities, or establishing infrastructure, a land servicing or development loan is what you’ll need. This type of loan allows developers to obtain capital for the development of their projects.

There are two primary types of financing options to consider, unsecured equity or secured debt financing which can be further categorized into senior and mezzanine financing.

Take a look at how the different types of land servicing loans can be utilized.

Unsecured Equity

This option involves selling a piece of equity, or a stake in the project, to investors in exchange for a cash investment. This type of loan is referred to as ‘unsecured’ because it isn’t backed by a form of collateral.

Senior Debt

This type of loan is typically the primary source of capital for a project and is secured from a major lender like a bank.

Mezzanine Debt

An alternative form of financing, mezzanine debt is typically used to secure the remaining capital needed to complete a project. It’s often used alongside senior debt financing but ranked in 2nd position.

Using a combination of all three types of financing is quite common for developers and MCAP provides funding in each category, lending against future serviced lot value, recoverable costs, and residual land.

Learn More About MCAP Development Loans

Construction Loan

You’ve secured the land and you’re ready to build – a construction loan is the next step in bringing your development to fruition! A construction loan can be used to pay for project-related costs for new construction or renovations to an existing property.

MCAP provides construction loans to complete builds on low-, mid-, and high-rise condominiums, townhouses, single-family projects, and single or multi-tenant commercial buildings such as retail centers and commercial office towers.

Learn More About MCAP Construction Loans

Development Finance Loans at a Glance


Project Type

Land Loan

  • Future large-track land development
  • Multi-family sites
  • Commercial sites
  • Industrial land/sites

Development Loan

  • Master-planned residential communities
  • Lot servicing
  • Lot deposit
  • Industrial servicing
  • Commercial servicing

Construction Loan

  • Condominium (high-rise and low-rise)
  • Rental apartment (high-rise and low-rise)
  • Townhouse
  • Freehold
  • Commercial
  • Industrial
  • Office
  • Inventory/ receivable


6 months to 24 months

6 months to 36 months

12 months to 36 months

Loan Amount

$5M - $100M

$5M - $200M

$5M - $200M

Securing a loan, or loans, that meets the needs of your project is not a one-size-fits-all situation and may require creative solutions. That’s where MCAP’s Development Finance Group can help you find the best option for your next project. Contact us today to get started.

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