Are Lenders Justified in Being Wary of Modular Construction?

Any developer who has explored building a project modularly instead of on-site has likely run into trouble finding a lender to work with. In general, lenders are far less familiar with modular construction and therefore are hesitant to lend money for such projects despite the major benefits of projects being built faster and for less money. Compared to on-site construction, modular construction requires a lot of capital early on because both site work and modular building are happening simultaneously. Lenders are also wary of the risk involved in transporting the modules from the factory to the final site. For these reasons and more, lenders are not as willing to fund modular projects even though “modular construction could claim $130 billion worth of the combined U.S. and European construction markets by 2030.” Click here to read more about the lending climate for modular construction.