C-PACE interest rates compared to traditional construction loans show that C-PACE often offers more favorable terms, especially in the current economic climate.
C-PACE Interest Rates
- Range: C-PACE loan rates typically range from about 7% to 8%.
- Structure: These loans are long-term, with fixed rates and terms that can extend up to 30 years. Rates are often priced at a few hundred basis points over the yield on 10-year Treasury bonds.
- Benefits: C-PACE provides non-recourse financing, meaning it is secured by the property rather than the borrower’s personal assets. Repayment is tied to property tax bills, allowing owners to pass costs to tenants.
Traditional Construction Loan Interest Rates
- Range: Traditional construction loan rates from banks are often higher, ranging from 10% to 15%.
- Structure: These loans typically have shorter terms and floating rates, which can increase with rising interest rates.
- Drawbacks: They usually require more collateral and personal guarantees from the borrower, increasing financial risk.
In summary, C-PACE loans offer lower interest rates and a more favorable financing structure compared to traditional construction loans, making them attractive in today’s volatile capital market conditions.
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