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How To Determine The Right Financing Structure For Your Development Project

Financing Structure

Embarking on a development project is a multifaceted journey that requires careful planning, strategic thinking, and, perhaps most importantly, the right financing structure. The financial blueprint of your project plays a pivotal role in its success or failure. In this article, we’ll explore key considerations to help you determine the optimal financing structure for your development project.

  1. Project Scope and Scale: Before delving into financing options, it’s crucial to have a clear understanding of the scope and scale of your development project. Different projects, whether residential or commercial, come with distinct financial requirements. Ensure that the financing structure you choose aligns with the size and complexity of your endeavour.
  2. Risk Assessment: Assessing risk is an integral part of any development project. Understand the potential risks associated with your project and evaluate your risk tolerance. High-risk projects may require more robust financial backing or alternative financing structures. Striking the right balance between risk and return is essential for the long-term success of your venture.
  3. Timeline Considerations: Development projects often operate on tight timelines. Consider the duration of your project and whether you need short-term or long-term financing. Bridging loans are a popular option for projects with immediate funding needs and can provide a financial bridge until more stable, long-term financing is However, if you know you will need development funding, it’s best to secure that before entering a bridge loan where the exit is unknown.
  4. Cost Breakdown: Break down the costs of your development project into distinct phases, such as land acquisition, construction, and marketing. Different financing structures may be better suited to specific phases of your project. Tailoring your financing approach to the unique financial requirements of each stage ensures a smoother financial flow.
  5. Interest Rates and Terms: Scrutinise the interest rates and terms offered by potential lenders. A financing structure might look appealing at first glance, but the devil is often in the details. Understand the terms of the loan, including interest rates, repayment schedules, and any associated fees. Choose a structure that aligns with your project’s financial capabilities.
  6. Diversify Funding Sources: Consider diversifying your funding sources to mitigate risk. Relying on a single source of financing can leave your project vulnerable to market fluctuations or changes in the economic landscape. Explore a mix of traditional loans, private financing, and potentially government incentives to create a resilient financial structure.
  7. Consult Financial Experts: Don’t hesitate to seek advice from financial experts. Engage with financial advisors, accountants, or development finance specialists who can provide insights into the most suitable financing structure for your specific project. Their expertise can help you navigate complexities and make informed decisions.

Choosing the right financing structure for your development project is a critical step in ensuring its success. By carefully considering the project’s scope, assessing risks, and aligning financing with your timeline and cost breakdown, you set the stage for a financially sound venture. Remember, each project is unique, and there is no one-size-fits-all solution. Take the time to explore options, consult with experts, and craft a financing structure that paves the way for your project’s prosperous future.

BLG Your Partner For Tailored Success

In the dynamic arena of development projects, securing the right financing structure is paramount, and BLG Development Finance stands out as a trusted partner offering a versatile range of funding options. From residential development finance, covering land acquisition to construction costs, to specialised solutions for commercial projects and bridging loans addressing time-sensitive needs, BLG’s expertise caters to diverse project demands.

BLG has a 20 years’ track record in the sector lending in both the good time and bad – one key factor in choosing a lender is finding a partner who lends during challenging economic time.

What sets BLG apart is our collaborative, holistic approach working closely with clients to understand project intricacies and deliver personalised financing solutions that seamlessly align with goals and timelines. Choose BLG as your financial collaborator, ensuring a solid foundation for the success of your development project.

WHAT OUR CUSTOMERS SAY ABOUT US

"A challenging site like no other with every inch of the plot being built on and 12 apartments built-out through a driveway 2.5m wide off of a main high street with limited access rights, not to mention all the complexities associated with 13 Party Wall Agreements. Most lenders would not have had the vision for the scheme or the confidence in Spiller Builders to build out the scheme.  I just wanted to say how helpful the entire BLG team have been during the build. A very approachable and knowledgeable team, with a “can do” approach to lending. We will be looking to do more business with you for sure."

“We have used BLG for development finance for over 8 years. During that time we have found their knowledge and expertise in the property development industry to be second to none. Their loan process, pragmatic and flexible approach to lending and flexibility when required has supported our business needs throughout the period and provided us with support to deliver new homes in Bristol and the surrounding areas.”

“As property developers you never know the curve balls that you may get and a project that is great on paper may prove a bit more tricky.  This happened to us on a project that BLG have funded and throughout they have supported us.  Our business likes to be collaborative and when we hit those tough moments it really felt like we were working as a team with BLG.  If you have a decent project you can get it funded, but what you really need is a business that is there to support and advise you as well.  For us on this project it was BLG.”

“I approached BLG Development finance with an opportunity I had in Chesham, Buckinghamshire, to build 5 new build houses in 2021. My main contact was Anil Bains who is a Director covering Asset Management. Within very quick timescales, BLG provided me with indicative quotes in regards the finance levels they could offer me. Having considered those levels, I requested a valuation to be carried out which again was dealt with swiftly. We proceeded to completion. The build went very smoothly with monthly monitoring being carried out by BLG and monthly drawdown requests dealt with in a very timely manner. Due to a difficult time generally in the market in regards selling, I was in need of a six-month extension to the loan which again was appraised very quickly and granted. Having dealt with numerous funders over the last 20 years, I can only speak highly of my personal experience with BLG and would very confidently work with them again on any future projects. “

"From our side it has also been a pleasure working with BLG and the team there. We have found you easy to deal with, proactive in resolving any minor issues that have arisen through the project and shown great flexibility in working with us as a partner. We will certainly like to work with you on future partners."

“I really appreciate your hard work. We really like the way you communicate & I must say I haven't seen many people who are that approachable.”

“A very efficient processing team, dealing with the DD once deal credit approved, through to completion”

“Many thanks for your efforts on this one and getting it approved and sorted so swiftly, very much appreciated. I am sure I will be speaking to your over the coming months.”

“We had other funding options, but chose to use BLG again, as we work well with the team, who always provide very clear information and advice with a friendly approach throughout the funding process. Very efficient and always very helpful.”

“Many thanks Anil, it’s been a real pleasure working with BLG so far.  We’re lining up the next project too”

“We would recommend all staff we have dealt with at BLG, as we are very satisfied with the team and the initial offer/terms presented, then you and the funding team, through to the draw down team at valuation stage.”

“All documents are clear and the way you keep clients informed, all the way along the funding process, is refreshing for us”

“With regard to what should be improved at BLG, we work with many lenders in our business and we do not get the help and response we have had on the two projects with all at BLG on our funding for our developments.”

“We would particularly mention Dave Edwards and Tom Pitts as being central to having a smooth working relationship and being positive and helpful at all times. Their guidance in helping us navigate the project from inception to completion was invaluable. As was their patience, particularly at the beginning. We look forward to many future projects with the BLG team.”

“We would like to express our appreciation for your support on our development in Bristol. We were very pleased that, from the outset, you shared our vision of the project to convert a dated but classical building, that had outlived its usefulness as a school, into unique luxury apartments with views overlooking the city. We found our dealings practical and streamlined. Monthly payments were processed in an efficient and timely manner.”

“BLG are very good at communicating with clients and all documents are very clear and all at BLG are always happy to help.”

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