No (or low) presale construction funding
Funding from non bank lenders is creeping back into the market, even for development loans with low, or even no presales. After the cost of capital spiked in June, we are seeing a competitive tension returning to the market with more lenders willing to take on higher levels of risk for good sponsors and quality assets.
The Bank’s are still insisting on a high level of presale debt cover for construction loans. Their processes are even slower than before and the requirements and funding appetite is fluid, which makes it uncertain why they take so long to process an application. While Bank’s have a critical role to play in business lending, their relevance in construction funding for many businesses is questionable.
With the high level of equity needed to qualify for a bank loan, sophisticated borrowers are questioning their return on equity. So, the reemergence of competitive non bank funding solutions who provide higher leverage at lower presales is very welcome.
We have access to many capital pools and our deep relationships give the assessment of your transaction the right attention and priority over others. Our service is very competitively priced, our offering is multi award winning, our people are knowledgeable, and our processes are efficient.
All of this is backed by our ‘Approved or its Free, Guarantee’. So, you can transact with us with confidence.
Don’t put all your eggs in one basket!
Don’t borrow everything from the one Bank.
This is especially true for property clients who have various investment assets and for developers as well.
Property finance is a segment of lending where Bank’s turn ‘on and off’ their appetities regularly and where small changes in policy or appetitie has huge consequences for borrowers. When a bank wants to reduce the amount of lending on property, it usually follows the following pattern:-
- Tighten policy (reduce LVR’s and/or increase ICR’s)
- Increase pricing
- Stop lending to ‘new to Bank’ clients
- Suspend new loans altogether
Every bank will go through it’s cycles of loose, then tighter credit controls. And when one turns off, there are often other options available to you. Except if you have all your assets with that one Bank. Commercial refinances are slow and can be expensive.
By having various lending relationships, you can be more agile with your lending options and keep a competitive tension between the lenders you deal with to ensure the terms, security structure and interest rate remains competitive. That’s where BF Money can help.
We are at the forefront, of these changes and can often communicate them to you before your Bank does. We take much care to place you with the right institutions and continually monitor and manage the inter-relationships between them so you can focus on your business.
That’s just part of the value we bring.