Qualifying for development finance means showing your lender that your project is a safe bet. In theory, you simply need to convince your lenders that irrespective of the outcome, they will get their money back in a timely manner.
Of course, this can be easier said than done – particularly when looking to borrow a significant sum of money. Even so, there are six steps all development finance applicants can take to boost the credibility of their application:
1. Make Sure That All of Your Documents Are Ready to Submit
First up, development finance specialists always show preference to those who plan and prep everything in advance. Presenting a complete and well-organised application gets the whole thing off to a confident start. This is where broker support can prove invaluable, ensuring all the documentation, paperwork and evidence you need is ready to present upon request.
2. Provide Evidence of an Established Portfolio
Your lender will want to see evidence of the successful completion of projects, similar to the project you are proposing. Your experience and track record will be scrutinised heavily, so it makes sense to provide as much convincing evidence as possible. The less work you give your lender to do when checking out your past history, the better.
3. Present a Strong Exit Strategy
A stronger exit strategy is not only about having a primary plan in mind for repaying your development finance loan. It is also about showing your lender that you have taken all possible contingencies into account, and that their money is safe come what may. Do not expect your exit strategy to be taken at face value – expect to be questioned to the nth degree.
4. Compare a Broad Range of Lenders
Comparing offers from the broadest range of lenders possible holds the key to getting a good deal on a development finance loan. The UK is home to a dynamic network of hundreds of specialist lenders, collectively offering a near-limitless number of specialist development finance products; many of which offer their services exclusively via broker introductions, and do not accept applications directly from borrowers.
5. Ensure Your Figures Are Realistic
The temptation to exaggerate or at least embellish a few figures is understandable. After all, you want to do everything you can to convince your lender your project is legit. Unfortunately, figures that are even slightly unrealistic demonstrate nothing but desperation and a lack of professionalism. Development finance lenders prefer honesty and transparency – even when things don’t look particularly impressive on paper.
6. Maintain Good Communication With Your Lender
Good communication always lays the foundation for a strong working relationship. Be ready to answer any questions your lender asks and ensure all requests for documentation/evidence are fulfilled promptly. And once again, be as honest and transparent as possible at all times, rather than telling your lender what you think they want to hear.