As lenders, we see a lot of deals. However not all proposals are presented to us with the full package of information, and this can often lead to delays. It is very important for us to do as much up-front groundwork as is possible. Personally, I am not keen to present a deal through my credit committee with too many gaps as these may not be able to be filled in later or the answers prove unsatisfactory meaning the deal may get withdrawn much later in the process which is not good for anyone.
So what information is required to successfully get a deal approved? Much of this will be obvious, but it doesn’t hurt to spell it out. I have split these between the scheme and the borrower. Firstly, the development itself, the following should be provided:
- Financial Appraisal – This should be up to date and as detailed as possible. It should ideally contain a full GDV breakdown on a unit-by-unit basis. It should also be the latest version as appraisals of course evolve. It’s also important to keep your funder updated of any changes as they occur
- Valuation Evidence – This can take the form of agents providing pricing for the developer, or a previous valuation maybe undertaken for a different lender. However, an appraisal without such back up information is not ideal
- Plans and Planning Consent – It is very helpful for the lender to provide a copy of the planning permission (if granted of course) and the correct plans. Quite often there have been changes and the plans provided either don’t tie up with the appraisal or the consent. This may cause delays. Lenders will always want to visit the site and so as much information that can be provided ahead of any site meeting is very useful. Planning Permission will have preconditions and if as a lender we know what these are then we can make sure they are covered in the appraisal
- Contractors – If the development is going to have a third-party contractor, then information on them including accounts is most helpful fully appreciating that this is often one area where decisions have not been finalised
In terms of the borrower then the following should be provided
- Full CV and details of previous developments – These should include previous lenders used by the developer. It doesn’t need to be great detail but enough to give the lender a feel for the experience of the developer. If there are any photographs or brochures of completed schemes, then these are always gratefully received
- Financial Information – These will take the form of accounts in the case of Corporates and statements of personal assets and liabilities for directors. This is often the area that can be the most contentious but for a lender is key. Again, as much information as is possible here as early into the process saves time later
Of course, we all understand that not everything here is going to be provided immediately, particularly personal financial information but the borrower needs to be prepared to provide this as soon as it is requested, so having it ready is going to help everyone
It is also really important, to be honest. So, if there is some adverse credit in the past, or ongoing CCJ’s then please tell us. Most of the time we can deal with these but if we find out later (and we will!) and this hadn’t been disclosed then there is a likelihood the deal may end there and then.
All the above is information readily available to the developer, and as early and detailed, that this can be provided the quicker the transaction can be approved.
Perry Kurash, Head of New Business, BLG Development Finance