Commercial Development
What is Development Finance?
Commercial Development Finance is a tailored loan for developers, funding land purchase and construction for commercial projects.
Purpose: Supports ground-up developments and major conversions, including hotels, offices, industrial units, and retail.
Versatile Use: Suitable for single or multi-unit developments like industrial estates, retail parks, and mixed-use schemes.
Loan Structure: Split into a “Day 1” loan for land purchase and a development loan for construction, released as work progresses.
Staged Funding: Funds are drawn in tranches, paid in arrears after surveyor approval at key milestones.
Repayment: No monthly payments—interest is rolled up or retained, with full repayment upon sale or refinance at the completed value.
An ideal solution for funding large-scale commercial developments efficiently.
Key Benefits
- Maximised Capital Efficiency: Minimise personal capital use to take on larger or multiple projects and boost returns.
- Specialist Lender Support: Access lenders who understand commercial developments and specific end uses like industrial or retail.
- Bespoke Funding: We structure tailored loans to fit your project needs.
- SME Developer Support: Financing available for first-time commercial developers and those transitioning from residential projects.
- Capital Raising: Unlock equity in owned property or land and secure development funding to improve cash flow and reinvestment potential.
Who is Eligible?
Limited Companies, PLCs, Sole Traders, Private Individuals, SIPPS and Partnerships are all able to use commercial development finance. Lenders will look at several factors when assessing suitability and price including:
- The level of experience of the developer
- The size and complexity of the project
- The cost of the scheme and schedule of works to make sure both are realistic.
- The value of the site and the value of the finished project or Gross Developed Value (GDV)
- Your probability of repaying the loan via either a successful sale or refinance of the property
- Your site must usually already have planning permission
- Commercial Development lenders generally prefer to see pre-lets or pre-sales, unless you can evidence a particularly high demand in the area for your type of asset.
How much can you borrow?
- Loan-to-value (LTV) is typically around 70% of the project costs and up to 100% of the construction costs. Some lenders will go to 80% of costs depending on the profile of the applicant and projects
- Generally, the total loan is restricted to 65-70% of the Gross Developed Value (GDV) to ensure that there is enough profit for the developer, or that it can be refinanced.
- You can normally get up to 60-65% towards the purchase price of the site, or raise this amount against a site with planning that you already own and intend to start developing
- Loan amounts starting from £100,000 to £50M+.
Interest Rates & Terms
- Rates will depend on the eligibility criteria but typically can be 0.7% to 1.5% per month depending on the risk level of the scheme
- Loan terms are typically 12– 36 months
- Fixed and variable rate options available.
