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Development Finance

Development Finance Approval Process

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Quick answer

Approval often moves through

5 to 8

Core assessment stages before full approval

  • Indicative approval stages 5 to 8
  • Key reviews commonly required Feasibility and valuation
  • Common approval outputs Terms and conditions
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The development finance approval process is the sequence lenders use to review the site, the borrower, the construction plan, the project feasibility and the proposed exit before deciding whether to fund the deal.

For Australian borrowers, approval is rarely based on one factor alone. Lenders usually want to see a complete application pack, clear costings, realistic end values, appropriate approvals and enough equity to absorb risk.

Unlike a standard residential loan, development finance approval usually involves multiple checkpoints, third party reports and formal conditions that must be met before the facility can settle and before construction funds can be drawn.

What does lenders review first?

Before a lender gets into pricing and formal loan documents, it usually checks whether the proposal is suitable for development funding at all.

That means confirming the project type, site location, planning status, borrower profile and intended exit fit the lender’s credit policy.

Common items reviewed early include:

  • iconProject type and scale
  • iconSite location and market demand
  • iconPlanning approval status
  • iconBorrower equity contribution
  • iconBuilder capability and build contract
  • iconExit strategy and any presales

How The Approval Process Works

Development finance approvals usually move in stages rather than through a single yes or no decision.

The lender first assesses the proposal at a high level, then works through valuation, feasibility, credit and any pre settlement conditions.

A typical approval sequence may include:

  • 01 Initial review
  • →
  • 02 Information pack
  • →
  • 03 Valuation and QS
  • →
  • 04 Credit approval
  • →
  • 05 Formal conditions
  • →
  • 06 Settlement and drawdown

Even after approval, the facility is commonly subject to conditions precedent such as signed contracts, final approvals, insurances and confirmation of equity contribution before funds are released.

What Lenders Assess During Approval

Most development applications are tested from both a project angle and a borrower angle.

Assessment 01

Project viability

Feasibility, end value, construction budget, approvals, presales, timeline and marketability of the completed project.

Assessment 02

Borrower strength

Equity position, experience, financial capacity, contingencies, guarantees and ability to manage delays or cost overruns.

Indicative lender review window Several stages
  • Initial terms may come first
  • Formal approval usually follows full review

In practice, a borrower may first receive an indicative response or term sheet. Full approval usually comes after valuation, credit review and confirmation that the file meets the lender’s risk settings.

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Documents Usually Needed For Approval

A clean approval process depends heavily on having the right information ready up front.

Missing documents are one of the main reasons development finance applications slow down.

A lender will often ask for:

  • iconFull development feasibility
  • iconPlans, permits and approval documents
  • iconFixed price build contract or detailed costings
  • iconBuilder details and programme
  • iconPresale contracts if required
  • iconFinancials, assets, liabilities and entity structure
  • iconExit strategy and refinance or sale assumptions
  • iconEvidence of cash equity contribution
2 - 3 +
Many development approvals involve at least two or three layers of checking, including lender assessment, valuation and often quantity surveyor review before the deal becomes unconditional.

Typical Approval Outcomes

Not every file goes straight from application to settlement. Many approvals are issued with conditions.

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Indicative support

An early response showing the lender is interested, subject to full assessment, reports and supporting documents.

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Formal approval

A credit approved outcome that sets loan amount, pricing, security, guarantees, milestones and settlement conditions.

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Conditional approval

Common where the lender still needs final valuation, QS sign off, presale evidence, permits, insurance or borrower equity verified.

What commonly delays approval

The strongest applications are usually the ones that arrive well packaged, clearly costed and easy for credit to verify.

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Incomplete feasibility

If the costs, revenues, contingencies or GST treatment are unclear, credit will usually pause the file for clarification.

This is often improved by:
  • icon A detailed feasibility spreadsheet
  • icon Clear contingency allowances
  • icon Realistic end values
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Approval and planning gaps

Missing permits, unresolved conditions or zoning uncertainty can cause a lender to delay approval or reduce leverage.

Lenders generally want the planning pathway to be easy to understand.
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Weak supporting reports

Low valuation outcomes or an adverse QS view can change the loan amount, equity requirement or conditions of approval.

Third party reports matter because credit relies on them heavily.
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Entity or guarantor complexity

Trust structures, multiple borrowers, changing shareholders or unclear source of equity can lengthen legal and credit review.

A clean structure and clear financial evidence can make approval much smoother.
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Steps In The Development Finance Approval Process

Step

01

Prepare the application pack, including feasibility, plans, costings and borrower financials

Step

02

The lender conducts an initial policy and servicing review to decide whether the project fits

Step

03

Independent valuation and, where required, quantity surveyor review are ordered

Step

04

Credit assesses leverage, equity, presales, risk factors, borrower strength and exit strategy

Step

05

Formal approval is issued with loan terms, conditions precedent and drawdown requirements

Step

06

Once conditions are satisfied, the loan settles and construction funds are released progressively

shape

Speak with a Development Finance Specialist

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Property development finance can vary significantly depending on the project size, location, approvals, and the developer's experience.

A specialist can review your project and help determine which lenders may be able to fund it.

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Additional Questions

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