Glossary · Reading the business
Construction costs
In short
These are expenses for building new structures. For a buyer, knowing these costs helps assess if a business's expansion plans are feasible and if the property value reflects potential future outlays.
What it means in a deal
If you're acquiring a business that plans to build, factor these costs into your total project budget. SBA 7(a) loans can sometimes finance new construction, but it adds complexity and additional due diligence, like appraisals and environmental reviews. Understand if the seller's financials account for future construction needs.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Construction costs
- Are closing costs, like attorney fees, eligible to be part of the project costs for an SBA loan?
- Can an SBA 7(a) loan cover construction or renovation of a business property?
- Can an SBA 7(a) loan be used for construction or renovation of business property?
- Can an SBA 7(a) loan be used to buy a commercial building currently under construction?
- Can I use an SBA 7(a) loan for construction or renovation of a business property?
- Can I use an SBA 7(a) loan to finance renovations or new construction for my business?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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