We see it all the time. Just getting a foot in the door with a traditional financer can be problematic, long winded and where policies and LTV’s constantly change.
Most lenders don’t understand the essential partnership of developer and funder, putting in place numerous hurdles SME developers have to jump through. From a “computer says” mentality, postcode prejudice or over reliance on a less than perfect credit record; these and many more can leave a great new build project dead in the water as financers obsess with past history.
This ignores the merits of the individual build project and the fact that even the best developers can have setbacks over the years; it’s about the future, not the past, yet so many lenders get it wrong.
Many funders issue terms that have long winded and complex “subject too’s” to buy them time and then comes the crux…. delays and a lack of transparency, but fees mined along the way. Over half our total business is where we come to the rescue of great developers, wrapped up in red tape and bureaucracy, suffering lender U turns and agreed terms that get changed.
Often financers are reliant on third parties, wholesale markets or external shareholders, which can lead to complex, clunky arrangements and financers changing terms and reneging on commitments.
It’s far better if a SME developer can find finance with a primary investor who isn’t reliant on third parties and has a long track record of being a developer, not a faceless banker, obsessed with spreadsheets. Decisions can be made quickly and there is less chance of the painful back and forth that leaves developers immobilised.
We tragically see this all too often and avoiding this is what sets us apart from all other funders; our returning customers keep telling us.