Development funding is assessed as a complete project. The land, planning, costs, experience, programme, sales assumptions and contingency all work together.
Planning and project scope
The proposal should explain what is being built, the current planning position and any conditions still to be discharged. Drawings, permissions and a clear schedule help define the project.
A detailed appraisal
Lenders normally expect acquisition costs, professional fees, construction costs, finance costs, contingency and expected end value to be set out clearly. Assumptions should be supportable rather than optimistic.
Experience and delivery team
The borrower’s track record matters, as do the contractor and professional team. Where experience is limited, strong advisers and a credible delivery structure become particularly important.
A realistic exit
The proposal should show whether repayment is expected through sales or refinance, how long that may take and what happens if the programme moves more slowly than planned.