Commercial development finance

Funding for the construction of commercial or mixed-use property, built to sell or to hold and lease. It is assessed on the project rather than mainly on your income, and the facility is drawn in stages as the build progresses. Interest is usually capitalised into the facility rather than paid monthly.

A commercial property loan funds the purchase of a building that already exists and is assessed on the rent and your covenant. Commercial development finance funds construction, is sized against total cost and completed value, and runs only to the end of the project. Many developers use both in sequence, one to build and one to hold.

Not always, and it changes what the funding costs. A signed lease or a pre-commitment reduces the risk the lender is pricing, and requirements vary by lender and project. Non-bank and private lenders will often fund without one at a higher cost, which can still be the better answer if waiting has a holding cost.

By what the completed building is expected to earn, rather than by comparing it to nearby house sales. The lease term, the quality of the tenant and the rent all feed that assessment, and a valuer engaged by the lender tests it independently. This is why the lease position belongs in the application, not in a later conversation.

It depends on the balance of the project and on the lender. A predominantly residential building with one shop is read differently from a commercial building with two apartments above it. Some lenders split the assessment and some pick a side, so we check the treatment before the file goes anywhere.

Yes. An owner occupier build is assessed on the project and on your trading performance, because your business becomes the tenant. Lenders want your financials alongside the feasibility, so tell us at the start: it changes which funders are worth approaching.

The lender engages a quantity surveyor to review your construction costs before approval and to certify progress claims during the build. They confirm the work claimed has actually been done and that the remaining budget still covers the remaining work. Their reports control the drawdowns.

It helps, and its absence is not automatically fatal. Lenders look harder at the builder, the contract and the site when the developer is new, and the terms reflect that. A conservative first project with a fixed price contract and a credible income story is far easier to fund than an ambitious one.