Quick answer
How is development finance different from a standard business loan?
Development finance is structured around a property project rather than only a trading company’s regular cash flow. A proposal may release funds in stages as work progresses. The assessment considers the scheme, the delivery team, costs, value, borrower contribution and exit. The full facility is not necessarily available on day one.
Key points
- A complete project budget includes professional costs, finance costs and contingency.
- Staged releases need to fit the timing of contractor payments.
- Loan-to-cost and loan-to-value use different denominators.
- The exit must work after completion costs, other debt and sales timing are considered.
Start with a complete project description
Give the site address, ownership structure, acquisition position, permissions, proposed units or commercial space and the nature of the works. Explain whether the project is a new build, conversion, refurbishment or another scheme. A clear description lets the broker identify which specialist assessment the case needs.
Include the people responsible for delivery and their relevant experience. The lender may need to understand the main contractor, professional team, programme and contractual arrangements. If a critical appointment or permission remains unresolved, put that in the brief with its expected date. A visible dependency is easier to discuss than a gap hidden inside an optimistic programme.
How can staged drawdowns work?
A development facility can release money as the project progresses, subject to the lender’s monitoring and conditions. Shawbrook’s development finance page gives one lender’s example of staged funding assessed against the scheme [1]. The precise drawdown method, inspection process and timing must be established for the actual facility.
Map the contractor’s payment dates against the lender’s release process. If work has to be evidenced or inspected before funding is released, the developer may need cash to bridge that interval. Ask how valuations are requested, how long reviews normally take in the proposed process and which documents are required each time. A facility can cover a budget in total while still leaving an awkward timing gap.
What belongs in the project budget?
Separate acquisition, construction, professional fees, permissions, utilities, insurance, finance, sales costs and contingency. State which items are confirmed quotes and which remain estimates. Record whether tax amounts are included and ask the relevant adviser about their treatment and timing rather than netting them away without explanation.
The budget should also show spend to date, remaining cost to complete and who supplies each contribution. An agreed loan-to-cost percentage is difficult to interpret if the parties are using different definitions of cost. Ask the broker to reconcile the project appraisal to the lender’s funding calculation line by line.
| Budget line | Evidence or question |
|---|---|
| Acquisition and site costs | Purchase terms, existing debt and associated costs. |
| Works | Detailed cost plan and contractor basis. |
| Professional and statutory costs | Appointments, approvals, monitoring and connections. |
| Finance costs | Interest method, fees and expected timing. |
| Contingency and exit | Cash available for overruns and the cost of selling or refinancing. |
A simple loan-to-cost and value example
Assume an illustrative scheme has total project costs of £1,000,000 and an expected completed value of £1,400,000. A proposed £700,000 facility would equal 70% of the stated costs and 50% of that expected value. Those are different ratios describing the same proposed facility.
This arithmetic does not establish that either ratio is acceptable to a lender. Definitions of costs, valuation assumptions, retained interest and the borrower contribution need to match the proposal. If the completed value falls to £1,200,000, the same £700,000 is about 58.3% of that value; the loan has not changed, but the cushion has. Use the example to ask better questions about the real appraisal.
How much contingency is actually available?
A contingency line is useful only if there is a credible way to fund it when needed. Identify who holds the cash, when it can be used and whether the lender requires approval. Do not count the same money as the acquisition contribution, working capital and overrun reserve.
Test a cost increase and a delay separately, then together. A longer build can affect interest, site overheads, insurance and sales timing as well as construction costs. Ask who updates the cost-to-complete assessment and what happens if it exceeds the remaining facility. These questions belong before work begins, while the plan can still be adjusted.
What supports the planned exit?
For a sale exit, show the sales assumptions, expected marketing period and net proceeds after costs and other obligations. For a refinance, explain the intended long-term arrangement and what the completed property must satisfy. Completion of the build does not automatically create a completed sale or an approved mortgage.
Model slower unit sales or a lower achieved value. If the project depends on one large disposal, make that concentration visible. Ask what happens if practical completion occurs close to the facility’s end date and there is still marketing or refinance work to do. The build programme and repayment programme need to leave room for each other.
Which documents make the next discussion useful?
Prepare a concise project appraisal, cost plan, programme, planning information, site details, borrower structure and delivery experience. Add evidence of your contribution and current acquisition status. A specialist may later need valuations, professional appointments, building contracts and legal documents; agree the recipient and secure transfer route before sharing them.
Keep the appraisal version dated. If the contractor price, sale assumption or programme changes, update the connected figures rather than sending several contradictory spreadsheets. A clear version of the project helps the broker distinguish a genuine change from an accidental mismatch in the material.
What does Felix do with a development enquiry?
The enquiry gives the team an initial amount, purpose, company profile and contact route. Use the contact conversation to explain the property scheme and any deadline. Our company profile labels do not replace a project assessment or determine whether development finance is available.
The next useful step is a specialist conversation around the full appraisal. Read indicative terms as the beginning of due diligence, with the outstanding conditions recorded. Funding Felix does not approve a scheme, provide a valuation or promise a completion date.
Frequently asked questions
Straight answers
Can I draw the whole facility at completion?
Not necessarily. Development facilities may release money in stages subject to monitoring and conditions.
What is gross development value?
It is an assessment of the completed scheme’s value. Establish the valuation basis and keep it separate from actual sale proceeds and total project costs.
Are overruns automatically funded?
No. Ask how a cost-to-complete shortfall is treated and identify the cash available for contingency.
Is a refinance exit guaranteed?
No. A future lender makes its own assessment at that time. Model a delay or different valuation.
Does the Felix tier establish project eligibility?
No. It is a provisional company enquiry profile, not development underwriting.
Sources and further reading
Where the external facts come from
Sources checked on 27 October 2026. Provider links are references; they do not imply a partnership or an available offer.
- Shawbrook: development finance ↗
An example of staged property development funding and project assessment; no partnership is implied.
