commercial property development

Commercial Property Development Finance Options

In Property Development by Nevaeh Stevens

It takes a lot of money to kick-start a commercial property development project. Any perceptive businessman knows that using personal money to fund such a big venture is a risky and impractical move. Instead, they use a variety of secure funding options. If you are planning on getting into commercial property development, you should know what funding solutions are available.

Traditional Options

The most obvious funding source you can try first is commercial mortgage. Banks have sufficient reserves to finance big and small commercial property development projects. Expect the application process to be tough, though. Banks are notorious for their stringent terms, and there’s a pretty simple explanation to that. Like you, they also want to eliminate all possible risks to make sure their investment will pay off. This is, in fact, why many borrowers fail in their application and are forced to go for alternative funding solutions.

Asset-based lending is also a good option, i.e. if you have a sufficient asset to use as collateral. You can offer your balance-sheet assets, accounts receivables, and inventory as collateral, although the amount you can borrow will be based on the estimated value of your assets. In case you accidentally run out of funds while your project is ongoing, you may apply for an overdraft, which allows you to withdraw money from your bank account even after you’ve emptied it.

All traditional funding options entail a high-standard application process. Generally, if a lender finds out that you have insufficient collateral, low debt-to-income ratio, no personal guarantees, deficient operating history, or poor credit, they would turn your request down right off the bat. Especially if this is your first project, it would require a pretty solid credibility to prompt a lender to agree to a commercial property development finance.

Alternative Solutions

In case you fail to comply with the basic requirements of traditional financing programs and aren’t granted the loan for your project, don’t worry because there are other options that you can try. Companies like IBN Direct offer alternative property development finance solutions to property developers at more manageable terms. They help businessmen still obtain financing despite being unsuitable for traditional financing.

Alternative funding solutions providers have a vast network of funders that are ready to lend money to commercial property developers. Their funders do not implement strict application guidelines, and so borrowers can easily obtain funds without undergoing meticulous scrutiny. They can even lend you up to 70 per cent of the entire fund you need for your project.

Worried that your documents may not suffice you application for alternative funding? Or do you have distressed assets and major arrears getting in the way between you and the commercial property development finance? An alternative funding solutions provider can help you with those. They will provide all the support you need until you fully qualify for alternative funding for your project.

When it comes to securities, alternative funding solutions providers are quite more lenient than traditional lenders, too. They are okay with offices and office blocks, industrial units, factories and warehouses, retail shops, residential unit blocks, vacant land, and some specialised securities as collateral. If you have assets that don’t belong to the category, they would make sure to present you with work-arounds.

Knowing how to get a loan for property development is key to your success. Nonetheless, alternative funds are off the grid of standard financing. Therefore, the risk of getting ripped off is higher than in traditional financing. This is why you have to be careful when choosing a provider. Make sure to turn to a trusted company like IBN Direct.