How to be prepared when applying for development finance
It’s always good to be prepared and applying for development finance is no different.
- If you’re purchasing land, it’s important to ensure that you carry out the necessary due diligence and that it has the correct planning permission in place for your planned build. Finance is available to purchase the land before planning is obtained, if necessary.
- Lenders will expect you to provide a detailed breakdown of costs. These should include the cost of purchase, professional fees (legal, planning, architect and QS and building control etc.), build costs and a contingency to cover cost overruns.
- Most development finance is funded in stages (or draw downs) where funds are released along an agreed timeline throughout the build. You will need to think about the stages in advance and when you will need funds to be released to move to the next stage. This will then be agreed with the lender to help the build run smoothly and ensure that you have the funds available when you need them. The lender will release funds in arrears on receipt of their monitoring surveyor’s report.
- If you have completed Development projects previously, it’s helpful to prepare a CV to accompany your portfolio. It should include details of any planning obtained, a breakdown of the costs, any professional services used and managed and evidence of the finished project. If this is your first development, a CV from your contractor and other professional services will be essential.
- Prepare an Asset and Liability statement and financial accounts (if available). This will help the lender understand your financial position.
- If, as part of your own due diligence, you have approached local agents for their opinion on value and demand for sale, it’s always helpful to include this in your plans, as local knowledge always helps.
- Always have a good understanding of how you will exit the development finance once the project is complete. If you intend to keep the property, we can help obtain an indication of the funding available and if you intend to sell, evidence of your research on demand for sale will give some initial reassurance.
How can Sterling Commercial Finance Help?
At Sterling Commercial Finance, we’ve been helping businesses access funding for over 20 years. Get in touch with the team today to see how we can help your business.