Finance both the land purchase and the site development work — grading, utilities, roads, and infrastructure — in a single loan. Select Capital Funding’s acquisition and development loans are built for experienced developers who need to move from raw land to build-ready lots fast. Nationwide. Flexible draws. Same-day review.
| Phase | Development Stage | Financing Coverage |
|---|---|---|
| Phase 1 |
Raw Land Undeveloped parcel with no infrastructure. |
✅ Covered by A&D Loan |
| Phase 2 |
Land Acquisition Purchase of raw or underdeveloped land. |
✅ A&D Loan funds the purchase |
| Phase 3 |
Horizontal Development • Site Clearing & Grading • Utilities Installation (Water, Sewer, Electric) • Roads, Access & Drainage • Permits, Entitlements & Infrastructure • Finished Lots / Build-Ready Site |
✅ A&D Loan Draw Phase |
| Phase 4 |
Vertical Construction Residential, commercial, or multifamily construction. |
✅ Construction Loan or Combined A&D + Construction Loan |
| Phase 5 |
Exit Strategy • Sell Improved Lots to Builders • Sell Completed Buildings • Refinance to Permanent Financing |
Project Exit |
| Financing Coverage Summary | |
|---|---|
| ✅ A&D Loan | Covers Phases 1–3 |
| 🏗️ Construction Loan | Covers Phase 4 |
| 🚀 Combined A&D + Construction Loan | Covers Phases 1–4 |
Finance the acquisition of raw residential land and the horizontal construction needed to create finished, build-ready lots — roads, utilities, drainage — ready for vertical homebuilding.
Acquire and develop commercial land parcels — installing infrastructure and completing the site work necessary to prepare the property for commercial, industrial, or mixed-use vertical construction.
Fund the land acquisition and full site development phase of a multifamily development project — bringing raw land to pad-ready condition before transitioning to a construction loan.
Acquire and develop vacant or underutilized infill parcels within established markets — installing infrastructure and preparing sites that are ready for immediate vertical construction.
Fund the land purchase and pre-development costs — permits, entitlements, environmental studies, site engineering, and infrastructure work — before a full construction loan is available.
Structure a single loan that covers both the horizontal development phase (A&D) and the vertical construction phase — eliminating the need for a separate construction loan refinancing midproject.
Finance the land acquisition and full horizontal construction of residential subdivisions — roads, utilities, drainage, and lot preparation — for experienced builders and developers.
Acquire and develop multifamily land parcels through full site preparation and infrastructure installation — ready for vertical construction with a smooth transition to permanent financing.
Acquisition and development financing for commercial, office, retail, and industrial land parcels — from raw land purchase through full infrastructure installation and site readiness.
Fund the acquisition and site development of mixed-use parcels in urban and suburban markets — preparing for vertical construction of residential, retail, and commercial components.
A single financing solution covering both the horizontal development phase and the vertical construction phase — eliminating a mid-project refinancing and keeping your development moving without interruption.
Financing for acquiring and developing vacant infill parcels within established neighborhoods — preparing underutilized sites for residential or commercial vertical construction.
A&D financing for industrial, warehouse, and logistics land parcels — funding acquisition and the infrastructure work required to bring a large-format development site to build-ready status.
Once your A&D phase is complete and your lots are build-ready, transition seamlessly to ground-up construction financing — residential, multifamily, or commercial.
Share your project summary — land parcel, development scope, budget, permits/entitlement status, developer background, and exit strategy — with our team.
We evaluate the land's current value, the development budget, the as-improved lot value, the developer's experience, and the viability of the exit strategy.
We structure your A&D loan — loan amount, LTC, term, and draw schedule — with milestone-based disbursements tied to your development phases: clearing, grading, utilities, roads, and final lot completion.
Receive your A&D loan term sheet, review the structure, and move to closing quickly — with in-house fund controls and draw management established at closing.
Execute your development plan — submit draw requests as milestones are completed, receive funds quickly, and reach your exit: sell improved lots, begin vertical construction, or refinance to permanent financing.
| Feature | Land Loan | Acquisition & Development (A&D) Loan | Construction Loan |
|---|---|---|---|
| Covers Land Purchase | ✅ Yes | ✅ Yes | ❌ No |
| Covers Site Development | ❌ No | ✅ Yes | ❌ No |
| Covers Vertical Construction | ❌ No | ❌ No (separate phase) | ✅ Yes |
| Draw Schedule | Typically none | ✅ Development milestones | Construction milestones |
| Horizontal Work Funded | ❌ No | ✅ Grading, utilities, roads | ❌ No |
| Typical Loan Term | 12–24 months | 12–24 months | 13–24 months |
| Underwriting Basis | Raw land value | As-improved lot value | As-completed building value |
| Ideal Project Stage | Pre-development land banking | Raw land → finished lots | Build-ready site → completed building |
| Best Exit Strategy | Sell raw land / develop later | Sell improved lots / build | Sell or rent completed building |
An acquisition and development (A&D) loan is a specialized real estate financing instrument that covers two distinct phases of a development project in a single loan: the acquisition of raw or underdeveloped land and the development of that land through horizontal construction — grading, utility installation, road construction, drainage, permits, and infrastructure work. Unlike a land loan, which only finances the purchase of land, or a construction loan, which funds vertical building construction, an A&D loan is specifically designed to take a project from raw land through the site development phase to produce finished, build-ready lots or parcels ready for vertical construction.
A land loan finances only the purchase of a land parcel — it does not fund any development work. A borrower who secures a land loan still needs to arrange separate financing to cover the grading, utilities, roads, and infrastructure needed to prepare the land for building. An acquisition and development loan combines the land purchase and the development costs into a single instrument with a draw schedule. This eliminates the need for a second financing at the development stage and provides a more efficient structure for developers who intend to move quickly from acquisition into active site work.
A construction loan is designed to fund vertical construction — the actual building of structures on an already-prepared site. It typically assumes the land is already acquired and the site is already developed (utilities in, roads in, permits secured). An A&D loan, by contrast, funds the phases before vertical construction begins: acquiring the raw land and completing the horizontal site development work that creates the conditions for building. Many development projects use both — an A&D loan for the land acquisition and site development phase, followed by a construction loan for the vertical build phase. In some cases, a single combined A&D plus construction loan covers the entire development cycle.
Horizontal construction refers to the site development work that takes place at ground level before any vertical building begins. It includes clearing and grubbing the land, grading and earthwork, excavation for utilities, installation of water and sewer lines, electrical and gas service, stormwater drainage systems, road construction and paving, sidewalks, curbs, signage, and the completion of any entitlement-related requirements such as environmental mitigation. This is the core scope of work that an acquisition and development loan finances — taking raw land from its natural state to a fully infrastructure-serviced, build-ready condition.
Acquisition and development loans can be used for a wide range of development scenarios, including:
Each deal is evaluated individually based on the land’s current and as-improved value, the development budget, the developer’s experience, market demand, and the proposed exit strategy.
The as-improved value — sometimes called the as-developed or finished lot value — is the projected value of the land once the development work is complete and the lots or parcels are fully infrastructure-serviced and build-ready. Unlike raw land, which may have limited market value, finished lots have a substantially higher value because they are ready for immediate vertical construction. A&D loans are underwritten based primarily on the as-improved value of the project, which determines the maximum loan-to-value ratio available. The as-improved value is typically supported by an appraisal that models the finished lot values based on comparable sales in the market.
A draw schedule is the structured disbursement plan for the A&D loan, defining when and how much of the loan proceeds are released to the borrower based on completed development milestones. Rather than funding the full loan amount at closing, an A&D lender disburses proceeds in stages as development work is verified and completed — for example, releasing funds after site clearing is done, after utilities are roughed in, after roads are complete, and so on. Draw requests are typically reviewed and disbursed quickly, keeping the project moving without delays. The draw schedule is established at loan closing and customized to the project’s development sequence.
Select Capital Funding’s development loan program offers up to 90% loan-to-cost (LTC) on acquisition and development costs, with loan-to-completed value (LTCV) up to 70% of the as-improved finished lot value. Specific ratios vary based on the project’s risk profile, the developer’s experience, the market’s absorption conditions, and the strength of the business plan and exit strategy. Each project is underwritten on its individual merits. Contact our team to discuss the appropriate leverage structure for your development project.
Acquisition and development loans are short-term instruments. Most A&D loans carry terms of 12 to 24 months — sufficient to complete the land acquisition and full horizontal development phase and reach the exit event. Extension options may be available depending on project progress and lender discretion. The loan is designed to be retired through the sale of improved lots, a transition to a construction loan, or a refinancing event once the development is complete.
Yes. In many cases, it is possible to structure a single loan that covers both the acquisition and development (horizontal) phase and the vertical construction phase — eliminating the need for a mid-project refinancing when transitioning from A&D to construction. This combined A&D plus construction structure is particularly advantageous for developers who want to minimize closing costs, reduce transaction complexity, and maintain financing certainty through both phases of their project. Speak with our team about your specific project to explore whether a combined structure is appropriate.
The most common exit strategies for acquisition and development loans include: selling the finished, build-ready lots to homebuilders or commercial developers once the horizontal development is complete — generating sale proceeds to repay the A&D loan; transitioning the project into a vertical construction phase using a new construction loan or a pre-committed construction financing arrangement; or, for developers who also build, using sale proceeds from the first completed homes or commercial units to pay down the A&D loan. The strength and realism of the proposed exit strategy is a key underwriting factor for every A&D loan.
The initial review process typically requires the following information:
Providing a well-organized project package at the outset allows our team to respond quickly with a same-day expression of interest and move efficiently toward closing.
Whether you’re acquiring raw land for a residential subdivision, preparing a commercial development site, or looking to combine your A&D and construction financing into a single instrument — our team can structure the right loan for your project, timeline, and exit.
