Developer Exit Loans: A Lifeline for Property Developers Facing Financial Challenges

As a property developer, you’re likely aware that development projects can be unpredictable, even if you have years of experience under your belt. Unexpected setbacks, such as delays and rising costs, can make it difficult to complete a project on time and repay your initial loan. In some cases, lenders may not be able to offer an extension or forbearance, and you may run out of funds to complete the project if you’re self-financing. Fortunately, developer exit finance can provide a solution to such situations, helping you to save your project and avoid financial losses.

What Is A Development Exit Loan?

The development exit loan serves as a form of bridging finance aimed at supporting developers as their project nears completion. By replacing the current development finance, it lowers finance costs and releases additional equity to aid cash flow or for subsequent projects.

This type of loan is typically used when a developer encounters unforeseen circumstances. For instance, cost overruns, delays, or changes in the market that make it difficult to pay off any outstanding loan on a recently completed or nearly completed property. Instead of abandoning the project or continuing to invest additional funds, the developer can exit the project and recover some or all their investment through a developer exit loan.

The loan is usually secured against the property being developed, and lenders may also require additional collateral to mitigate the higher risks associated with early exits. However, the loan terms can be flexible, allowing the borrower to repay the loan over a shorter or longer period, depending on their needs.

Why Are Development Exit Loans Used?

A developer exit loan can provide additional funding, additional time, or both, to complete a property project with the end goal of exiting the loan and earning a profit. These loans can be useful in situations where the project has experienced setbacks due to unforeseen circumstances, such as insufficient contingency planning, events outside of everyone’s control, or miscalculations.

In the past year, there has been a directionally 50% increase in developer exit loan business. This is primarily due to developers exhausting their own funds and original lenders being unable to extend the loan term if the project is not completed, often due to restrictions imposed by their own funders.

Who Offers Developer Exit Finance?

Developer exit finance is not a widely known financing option since not all property finance lenders offer it. Generally, it is provided by lenders with more diverse and flexible funding lines, allowing them to cater to a broader range of borrower situations. These loans are often offered by lenders with specialised expertise in the development sector, rather than lenders who solely provide bridging loans. This is because the lender needs to possess a deep understanding of how to structure more complicated cases and have the necessary development experience to evaluate the build and help in completing it.

Who Can Use A Development Exit Loan?

A development exit loan is generally provided to developers upon reaching practical completion of a property. This loan option is particularly useful for developers who are faced with unexpected challenges, such as adverse weather conditions, unanticipated expenses, or unforeseen issues that can significantly affect the project’s timeline and budget. In such situations, developers may find it challenging to repay any outstanding loans on the property, and a development exit loan can offer much-needed support. By refinancing the current property development finance and providing additional funds, this loan option can help cover the unexpected expenses and provide relief to the developer. This allows them to successfully repay the loan while minimising the financial risks associated with the unforeseen circumstances.

Can The Property Be Considered Wind And Watertight?

When considering a developer exit loan, one important factor to determine is whether the property in question is wind and watertight. This means it has been constructed to a point where it is resistant to the elements, such as wind and rain. This is typically achieved when the property is sealed against water and air infiltration, and the roof, walls, and windows are properly installed to prevent leaks.

When a property is wind and watertight, obtaining a developer exit loan is a straightforward process with minimal risk. These loans function similarly to standard bridging loans and can be available at similar rates and terms, up to 75% loan-to-value. This is because the property has already been built, and valuations at this stage are typically accurate.

However, if the property is not wind and watertight, the process becomes more complicated, although some lenders can still provide assistance. These cases would typically fall under the lender’s developer funding range and require more customized underwriting and development expertise, but it remains possible to obtain financing.

If your property development has been completed but has yet to be sold, and the repayment of the initial development funding is due, a development exit loan could be a viable option to consider. These loans can help you get your project back on track, by providing additional time to sell the units with a financing structure that is flexible, fast, and cost-effective. The added time can be incredibly valuable in terms of maximizing the returns at the end of the project. With a development exit loan, you can take advantage of the benefits of a longer-term financing arrangement, which is typically easier to manage and comes with lower borrowing costs. This type of loan can help you achieve your project goals while mitigating any financial risks associated with the sale of the property.


“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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