If you’re looking to raise funds for development quickly, the answer could be a short-term loan, specifically development finance.
What Is Development Finance?
Opportunities in the real estate industry are time-bound. Fast access to financing is crucial for many developers to get ahead of competitors looking to invest in the same opportunities, offset unforeseen circumstances and get projects underway. Enter development finance.
Development finance is short-term and convenient repayment terms. With development finance, lenders can be more gracious with requirements to satisfy, which might not be the same with other transitional loans.
Development finance can be your best bet when you need a quick financing solution to finance building materials and pay off project professionals. While lenders demand valuation during a project life cycle, development finance borrowers can submit a valuation after collecting the project. This flexibility affords the borrower enough lead time to raise more capital and proceeds for loan repayment.
When To Consider Development Finance
Whilst development finance might not be the correct solution for every company or property manager; you should consider this short-term finance option if:
1 You provide the correct paperwork
Lenders may have different development finance application processes, especially in today’s highly volatile housing market. And there is no standard template to follow. However, lenders frown on signing off loans to stakeholders who can’t show proof of their work or key documents essential to their line of work.
If you’re seeking property development finance, ensure you have purchasing receipts, proof of ownership documents, planning permits, etc. These documents help create a great picture in front of applicants, softening your spot to attain different heights of the development finance application process. Lenders cannot throw their necks on the line if you can’t provide copies of these essential documents.
2 You’re ready to bear expenses
Development finance might not be for you if you’re unwilling to settle for payments like deposits, arrangement and exit fees, etc. Lenders lean more toward borrowers who can settle these payments. It convinces them that you can repay your loan even after the standard development finance duration.
3 You have an exit strategy
Similarly, lenders need significant assurance of your repayment plan before issuing development finance. This is your exit strategy, and it is essential to know this before seeking development financing.
Lengthening Your Terms
Development finance providers offer a 3-24-month duration for issuing and repaying loans. If there is any reason you can’t meet this deadline, you’re free to communicate with your lender seeking an extension. That way, you’ll have enough time to complete your property, sell assets, or leverage other opportunities for full repayment.
All in all, it’s understandable to be unsure whether taking development finance is the best financial decision for your business. It pays to consult credible development finance providers when considering this type of short-term loan.
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