At-a-glance

Lenders want a reduced delivery risk. That means they focus on:

• Experience: developer track record, team and contractor capability.
• GDV & valuations: realistic sales values backed by RICS/local comparables.
• Security & LTGDV: first charges, clean title, and an adequate equity cushion.
• Exit plan & planning status: how the units will be sold or refinanced.

What is development finance?

Development finance is short‑term, project‑specific funding structured to cover land purchase, build costs, refurbishment and disposal or refinance on completion. Common forms include senior development loans, mezzanine finance, bridging, plot/land finance and joint‑venture equity. These facilities typically start from tens of thousands of pounds up to multi‑million pound schemes and are drawn in staged payments tied to progress.

For specialist construction and developer projects you can also explore our dedicated construction resources on construction business loans — or Get Quote Now — Free eligibility check to start your enquiry.

What lenders look for (overview)

Lenders blend three assessment categories: people (can the developer deliver?), numbers (is the GDV and cost plan credible?) and security (is the lender protected if things go wrong?). Below we break these into the practical items under most scrutiny.

Developer experience & track record

Delivery risk is the number one concern. Lenders will “lend to people” as much as to bricks and mortar. Key evidence lenders want:

• Relevant completed projects: schemes of similar type, size and location showing successful sales or refinance.
• Team strength: CVs for directors, site/project managers, QS and the named main contractor.
• References: independent valuer comments, estate agents, solicitors and prior funders where available.
• Operational capability: evidence of cost control, programme adherence and sales/commercial experience (marketing strategy, target buyers).

If you are a less‑experienced developer, lenders will want mitigants: experienced JV partners, an experienced contractor on board, or increased equity contribution to reduce lender risk.

Gross Development Value (GDV) & valuations

GDV is the projected total sale value of the completed scheme. Lenders use GDV to calculate Loan to GDV (LTGDV) and to stress test the exit. What matters:

• Realistic comparables: GDV should be supported by recent local sales evidence and a RICS valuation — not optimistic hopes.
• Sensitivity testing: lenders run downside GDV scenarios (10–20% reductions) to ensure there’s still an adequate security cushion.
• Valuation timing: initial valuation, interim inspections and a valuation at practical completion are common requirements.

Overstated GDV is a fast way to lose lender confidence; conservative, well‑evidenced projections win trust.

Security & loan-to-value (LTGDV)

Lenders secure facilities with a mix of legal and practical protections. Expect scrutiny over:

• First legal charge: usually a first charge over the land and development.
• Loan-to-GDV (LTGDV): senior lenders commonly fund up to c.60–70% LTGDV on schemes with planning and experienced teams; mezzanine can push overall funding higher but at higher cost and stricter terms. For raw land or pre‑planning risk, LTGDV will be lower.
• Additional security: retention accounts, step‑in rights, director/parent company guarantees and assignment of contracts or sales proceeds.
• Title & planning checks: clean title, absence of onerous covenants, overage or unexpected easements is essential.

Bear in mind ranges are indicative; every lender and every scheme is different — and pricing mirrors risk.

Exit strategy, planning & risk management

Lenders must be satisfied there is a credible exit. Typical exit routes are unit sales (private or affordable housing sales), bulk forward sale to a housing association or forward funding/refinance by buy‑to‑let / long‑term investor. Important considerations:

• Planning status: full planning reduces risk and typically increases lender appetite; pre‑planning land finance is higher risk and attracts lower LTVs or extra covenants.
• Exit clarity: proof of sales strategy, marketing costs, any pre‑sales or reservations, or agreements in principle with potential off‑takers.
• Contingency & cost risk: contingency budgets (5–10%+), allowance for inflation and an independent QS cost plan.
• Procurement: fixed‑price JCT/NEC contracts or guaranteed maximum price arrangements reduce delivery risk.

Other lender checks

Beyond the three core pillars, lenders will also examine:

• Company and director financials: management accounts, historic company accounts, bank statements and any material liabilities.
• Credit and litigation: company and director credit, outstanding disputes or judgments that could affect ability to deliver.
• Ground conditions & environmental: contamination risk, flood risk and abnormal ground conditions can change cost and insurance requirements.
• Contractor due diligence: contractor track record, resources, insurances and performance bonds where appropriate.
• Programme realism: a credible build programme with milestones and allowances for delays.

How to improve your chances — a practical checklist

Prepare a tidy, targeted project pack. Lenders are busy — make their job easy:

• Executive summary (site, scheme, developer background, funding required, exit plan).
• RICS valuation or sales comparables supporting GDV.
• QS cost plan and build programme with contingency shown separately.
• Contractor appointment letter and proposed contract (JCT/NEC) or evidence of procurement.
• Company and director accounts, bank statements and director CVs.
• Planning documentation, title deeds and searches (or a planning strategy if pre‑planning).
• Evidence of pre-sales or expressions of interest where available.

Tip: if your experience is limited, bring in an experienced JV partner or an experienced contractor and be prepared to show additional equity. Want help matching your project to specialist lenders and brokers? Get Quote Now — Free eligibility check.

Typical finance structure, indicative fees & timings

Typical workflow: enquiry → lender matching → soft underwriting → term sheet → legal due diligence → drawdown (staged). Indicative points (illustrative only):

• Arrangement fees: commonly 1–3% of the facility (varies widely).
• Monitoring and exit fees: lenders may charge monitoring fees and/or an exit fee.
• Rates: pricing depends on senior vs mezzanine, risk, term and lender appetite.
• Timescales: initial feedback can be hours to days; full term sheets often take days to a few weeks depending on complexity.

All figures are illustrative and subject to lender terms and project specifics. For a free, no‑obligation comparison of options from lenders and brokers who specialise in construction and developer lending Get Quote Now — Free eligibility check.

Frequently asked questions

What is LTGDV and how does it differ from LTV?

LTGDV (Loan to Gross Development Value) compares the loan amount to the expected completed sales value of the scheme; LTV usually refers to loan against an existing asset or land value. LTGDV is the key metric for development lending because it measures exit safety.

How much development experience do I need?

There’s no fixed rule. Lenders favour developers with at least one or more completed projects of similar size/type. If you’re new, lenders may accept experienced partners, a strong contractor or a larger equity contribution to offset inexperience.

Can I get finance for land without planning permission?

Yes, but it’s higher risk. LTV/LTGDV will typically be lower and pricing higher. Lenders will need a clear and realistic planning route and stronger mitigants (additional equity, experienced team).

Will lenders always ask for personal guarantees?

Not always, but personal guarantees are common on SME developer deals, especially where lenders require extra security because of company size, lack of trading history or where the borrower is a special purpose vehicle.

How long does development finance approval take?

Initial appetite or a soft offer can come within hours or days; full credit approval and legal completion typically take several weeks depending on complexity and how complete your project documentation is.

Does applying affect my credit score?

Submitting a project enquiry to UK Business Loans and being matched does not itself affect your credit score. Lenders or brokers may perform credit checks only once you proceed with a formal application.

Final steps — get matched to specialist lenders & brokers

Ready to find the right finance partner? UK Business Loans is a free introducer that matches developers to specialist lenders and brokers who understand construction projects. Complete a short enquiry and we’ll match your project to the most suitable partners — you’ll receive quotes and advice with no obligation.

Get Quote Now — Free eligibility check

Enquiry form is for eligibility and matching only — it is not a loan application. UK Business Loans introduces you to lenders and brokers who may contact you to discuss terms.