Securing financing is of the requirements for the success of any business venture. Unfortunately, this is a major challenge for most developers in the current times. In the last few years, there has been a reduction in the number of lenders.
Implications of the dwindling numbers of lenders
The main implication of this drop is on the developers who have to provide the assurance to the lenders that the business venture is going to realize high rates of profit. The lenders also prefer to work with an experienced client to be able to assess their reliability because they need assurance that there will be maximum probability that the project will pass credit checks. The fact that this field has little competition has caused a trend of high priced profit level deals. Banks are increasingly turning down such finance requests, opting not to deal with this particular type of lending. The effect of all this is that the lenders are at an advantage because there is an ever increasing number of projects that need funding, so they choose the projects which they feel will give the best returns to them. This leaves the developers at the mercy of the lenders and with no assurance of getting financing for their projects.
How to improve your chance of securing development finance
It is important to know that the best way to assure yourself that you will get the small business financing for your project is by taking care of the first impression. The kind of impact you give can help you get the best lender. To do this, you need to write an application that explains well about your project, highlighting in detail all the aspects that describe the project in the best possible manner.
There are some key features that the business plan must have such as the borrower’s security, a description of the type of development that needs financing, the actual amount and the type of loan – as different loan types such as standard business financing, startup loans and self-employed loans, with different terms carry different risks– that the borrower is asking for, and lastly but very important, the credit worthiness. The lenders expect you to prove that you understand the nature of your project clearly and to provide a detailed business plan and expected outcomes of the project, including all marketing strategies planned and a complete plan of the site as well.
Another important factor that lenders consider is the people behind the planning of this project. You need to convince them that these people are eligible to undertake the project successfully and prove that they have experience in building as well as project management. This means that a developer who does not have much experience will need to get access to people with the necessary experience. This is a major setback for new developers because nobody is willing to invest in them.
Engaging eligible people in planning for the project
As a new developer with no much experience in planning for the project, you may need to seek for the services of other people. In this case, you should only engage people with good track records and expertise in this particular area. This means that you need to take time and do proper research and networking among other activities.