Construction financing as an entrepreneur

Hello everyone, I want to arrange construction financing for a new build (single-family house) in the near future. We have a small, solid family business ([Rechtsform GmbH & Co. KG, 21MA]). The plot of land is already in my possession (approx. 120k€) and fully paid for. Additionally, I have another 75k€ of liquid equity available. The construction costs amount to about 450k€, which theoretically means a financing requirement of 375k€. After deducting the equity contributions and the services provided by the company itself, about 225k€ would need to be financed. Since I have zero experience with private loans and want to be somewhat prepared for the bank meeting, my question is: do banks generally accept that part of the total costs are covered by private withdrawals, or does some form of proof of private equity have to be provided? The financing bank is also the company’s main bank, so balance sheets etc. are available. Best regards!

I don't understand the question :( What does your company have to do with your private construction plans? Basically, a lending bank wants proof of ownership of existing equity, yes.

Hello

don’t worry if your company has solid figures. At first, it looks quite good. The problematic part could be the "Museklhypothek". It might not be fully recognized as equity capital. Then, on paper, your house simply has less value (for the bank).

Only your numbers will be interesting, you have to disclose them. Some self-employed people tend to calculate themselves as "poor" and then demand the bank to act as their tax advisor and disentangle the financial statements.

Hello everyone, I want to take out construction financing for a new build (single-family house) in the near future. We have a small, solid family business (legal form GmbH & Co. KG, 21 employees).

The plot of land is already in my possession (approx. €120k) and fully paid for. Additionally, I still have another €75k in liquid equity available. The construction costs amount to about €450k, which theoretically means a financing need of €375k. After deducting personal contributions and the services provided by my own company, about €225k would need to be financed.

Since I have zero experience with private loans and want to be somewhat prepared for the bank meeting, my question is: do banks generally accept that part of the total costs are covered by private withdrawals, or must some form of private equity proof be provided for this? The financing bank is also the company’s house bank, so balances etc. are available.

Best regards!

Depending on how the company stands in terms of capital and shareholder structure, it would be advisable to talk to the tax advisor again before the bank meeting. Since business interest is deductible in contrast to private interest, it can sometimes be more advantageous to generate interest expenses within the company. Through profit distributions from the GmbH or withdrawals from the KG, more equity can then be made available for the house construction.