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Development Finance

What Do Lenders Require From Developers?

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Quick answer

Lenders usually want

6+ key requirements

Before approving development finance

  • Main items reviewed Equity, experience, approvals, feasibility, builder, exit
  • Typical profit margin comfort 15 to 20%+
  • Common leverage assessment LVR and LTC
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Lenders usually require far more than a deposit. They want to see a capable developer, a viable project, realistic numbers and a clear path to repayment.

That means the borrower normally needs to provide evidence of equity, experience, approvals, professional reports, build costs, project team strength and exit strategy.

In development finance, lenders are effectively backing both the project and the people delivering it, so developer quality can matter just as much as the site itself.

What do lenders usually want to see?

When a developer applies for funding, the lender is normally trying to answer one central question: is this borrower organised, credible and financially strong enough to complete the project and repay the debt?

That assessment usually combines financial, practical and project specific requirements rather than relying on a single metric.

Common developer requirements include:

  • iconSufficient cash or equity contribution
  • iconA complete and credible feasibility study
  • iconEvidence of development or project delivery experience
  • iconPlanning status, plans and key approvals
  • iconA builder, contract and cost base the lender can rely on
  • iconA clear sale or refinance exit strategy

How Lenders Usually Review a Developer

The review process is often sequential. Lenders generally want to understand the borrower first, then the project, then the numbers, then the repayment path.

A common assessment flow may look like this:

Typical steps may include:

  • 01 Borrower background and entity review
  • →
  • 02 Equity and servicing position
  • →
  • 03 Site, plans and approvals review
  • →
  • 04 Feasibility and valuation review
  • →
  • 05 Builder, contract and QS review
  • →
  • 06 Exit strategy and conditions

If one of these areas is weak, the lender may reduce leverage, add conditions, request more equity, or decline the application altogether.

Financial Capacity Requirements

From a funding perspective, lenders usually focus heavily on two things:

Requirement 01

Equity contribution

The developer usually needs to contribute genuine equity by way of cash, land equity, or other acceptable property security.

Requirement 02

Capacity to absorb overruns

Lenders want comfort that the borrower can handle cost increases, delays or softer end values without the project immediately failing.

Typical lender funding range 60 to 75%
  • Lender funds the senior debt portion
  • Developer covers the balance through equity or acceptable support

Even where leverage looks acceptable on paper, lenders still want to understand whether the developer has enough liquidity and resilience to get the project through completion.

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Documents and Evidence Lenders Often Require

A lender normally wants the application supported by a full document set, not just a short summary of the deal.

The exact checklist varies, but most development finance submissions need enough detail for credit, valuation and legal teams to review the file properly.

Common requirements include

  • iconBorrower financials and asset and liability position
  • iconCompany or trust structure details and guarantor information
  • iconPlans, specifications and approval status
  • iconDetailed feasibility with all project costs and end values
  • iconBuilder quotes or fixed price building contract where available
  • iconPresales, leasing evidence or market support if relevant
  • iconCVs or project history showing prior development experience
  • iconExit strategy showing how the loan will be repaid
15 - 20 %
Many lenders still like to see a feasible profit margin of around 15 percent to 20 percent or better, because thin margins make projects harder to fund and easier to destabilise.

Experience and Delivery Team

For development finance, lenders often assess the developer and project team almost as closely as the site itself

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Track record

Completed projects, relevant industry background and demonstrated project management capability can materially strengthen an application.

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Builder and consultants

Lenders gain comfort where the builder, architect, engineer, town planner and other consultants appear experienced and appropriately matched to the project.

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First time developers

First time borrowers can still be funded, but they often need stronger equity, a simpler project, or an experienced team around them.

Common reasons developers fall short

Many applications weaken because the developer requirement side of the file is incomplete, inconsistent or too optimistic

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Not Enough Equity

If the borrower is relying on very high leverage, the lender may treat the project as undercapitalised.

Possible ways files are strengthened include:
  • iconInjecting more cash equity
  • iconUsing acceptable additional security
  • iconRestructuring the project scale
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Weak or Incomplete Feasibility

Missing costs, unrealistic end values or poor contingency treatment are common issues in development submissions.

Lenders typically want all major cost lines clearly evidenced.
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Insufficient Experience for the Project Size

A lender may be comfortable with the borrower personally, but not comfortable with the jump in project complexity or scale.

The bigger the project, the more important the delivery record becomes.
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Unclear Exit Strategy

Lenders need to understand how the debt will be repaid at the end of the facility, whether by sell down, refinance, or retained stock income.

A good project can still struggle if the exit is vague or unsupported.
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Steps To Prepare What Lenders Will Ask For

Step

01

Confirm the borrowing entity, security position and available equity

Step

02

Prepare plans, approvals status and consultant information

Step

03

Build a full feasibility including contingencies, interest and selling costs

Step

04

Gather builder information, quotes or contract documents

Step

05

Document your project history and the delivery capability of the wider team

Step

06

Present a clear exit plan showing how the lender will be repaid

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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.

Speak with a finance specialist about what lenders may require for your development project.

Submit the short form below and a development finance specialist will review your project and discuss what information may be needed for a funding assessment.

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