Industry Insights

Sourcing Development Finance

1st November 2017

In a previous life I worked for one of the High Street Banks, and after some years managing high performing teams, came back to Commercial Banking in 2003. At that time I was working in Winchester and every other client I met was a property investor – or so it seemed. The majority of these were amateur developers building on infill sites (for the most part on their own property).

All of the Banks were open to developers of all descriptions, everyone made money - even the bad developers and the bad lenders. Property prices rose inexorably and, as the saying goes, a rising tide lifts all boats. But that was before the crash in 2007/8.

These days there are really only two High Street Banks who are interested in Development Finance – and they have so many opportunities they can be very selective about which deals they do. For the most part they deal with existing, experienced Clients. The reason for the draw back is simple – cost of capital. The FCA/PRA agrees with the Banks the amount of capital they need to allocate to support loans according to sector, and property development, because of the perceived risk, requires more capital allocated to it than, say, lending to a manufacturing business or a legal practice.

So where does the less experienced developer go to fund their deal?

The good news is that the volume of lenders out there has increased enormously in recent years. There is a lot of capital seeking a return, and looking at the property market as a good source of profitable lending.

There are specialist Banks, Hedge Fund supported lenders, and Peer 2 Peer lenders, to name but a few.

So, whether you are a first-time developer, or an experienced developer with a proposal outside the appetite of the High Street Banks, there is still a good chance you will be able to source the funding you need.

Packaging the deal in a way which allows the prospective lender to see the opportunity is important. Key elements include:

    A Business Plan

    A CV

    A Development Appraisal

    A Market Report

    What Professional support will be employed to fill the gaps in your own experience.

    Ability and experience of any proposed contractor

The above is not an exhaustive list, but is a good start, and will help your finance professional to source the best deal for you.

Steve Fahy


Working Capital Specialists Ltd

M: 07525 931994 | E:

Posted by:

Steve Fahy

Working Capital Specialists Ltd

SPA Committee: Treasurer

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