Getting credit approval for an upcoming development finance project is far from a linear process. Lenders say no to many applications even if the project is a strong one. This is normally due to a lack of information or understanding of the scheme.
Here are 5 ways to make your application stand out from the crowd and hopefully get a ‘yes’ the first time around:
- Provide a detailed track record document – This should include:
- Financial headlines e.g. Bought site for X, build costs of X, sold for X (this is the bare minimum)
- Add marketing materials of previous schemes
- Add if each were a self-build/third party contractor etc.
- Add previous funders
- Provide a detailed Financial Appraisal and get your costs verified by a trained surveyor – This will allow you greater confidence in the financials of your own project and shows the bank and their monitoring surveyor that you have a good grasp of costs. Also, don’t forget to factor in the cost for your building warranty.
- Share a detailed cash flow of the project – A financial appraisal is really just the starting point. A detailed cash flow will allow both the lender and developer the ability to see where costs and sales are expected to fall. This will allow for more accurate projections, especially when it comes to interest costs. It’s also important to make sure that you’re realistic with the sales timeline.
- Don’t skimp in the details of scheme delivery – The professional team delivering the project is arguably the most important aspect of a successful scheme. Make sure you detail all the professionals and their experience in delivering similar projects to your own.
- Provide comparable data and evidence for your GDV conclusions – Lenders will want to know that the exit is achievable and you have an understanding of the local market. Use local agents, valuers and data to help you reach your conclusions.
Property Development Finance Specialists:
J3 Advisory is a specialist debt advisory that focuses on all aspects of real estate lending, including development finance, bridging loans and many other aspects of commercial property finance.
Good advice starts by understanding the underlying fundamentals of a project before giving advice. It is only then that a facility can be structured that is fit for purpose. For this reason information sharing is key, and the direct result is more successful outcomes.
For more information on any of the products that we offer or to discuss your funding requirements, please contact us on 0203 096 0718