Understanding Personal Guarantees
A personal guarantee is your legal promise to repay a business loan where you are a beneficial owner. Find out how it works and read our need-to-know...
Our simple 3-step guide takes you through the whole development finance application process; covering documents you need, lender protocols and timelines.
1. Provide documentation
Once you have found the loan you want to apply for, you’ll need the following key elements to get the loan approved:
Developer experience
Skills, professional qualifications and previous development history. You’ll only have to provide this once and we’ll save your information for any future applications.
Development appraisal
An essential tool for developers and lenders to assess the land value of any piece of land, site or building. It should include all costs (acquisition, build and sales) and expected GDV.
Development schedule
A detailed list of the properties/units with square footage and sales prices.
Asset & Liability (A&L) schedule for shareholders and personal guarantors
A list of personal assets and liabilities, required to demonstrate adequate cover for a personal guarantee(s). A personal guarantee is a legal promise to repay loans issued to a business where you are a beneficial owner.
Anti-money laundering
A valid identity document (passport, driving licence etc.) and proof of address (utility bill, bank statement etc.) for the borrower.
Source of wealth
A summary of how funds were obtained, with relevant supporting documentation.
2. Valuer, QS and Solicitors engaged
Once the lender receives all of the above, they will confirm credit-backed terms and instruct their Quantity Surveyor (QS) and valuer. You will need to cover these fees upfront or agree to cover the cost even if the loan does not complete.
The valuer will:
- Confirm site value and suitability for security
- Run a high-level sense check on the build costs
- Confirm the GDV of the end units
- Provide a report within 10 days
The QS will assess the team’s ability to deliver the scheme on time and on budget
The QS will:
- Closely examine costs and construction methodology, working with the valuer
- Assess ability to deliver the scheme on time and within budget
- Agree a drawdown schedule
- Provide a report within 2-4 weeks
Once the reports have been assessed by the lender, solicitors will be appointed. They can be appointed at the same time as the QS and valuer, but we recommend waiting to avoid incurring unnecessary costs.
Solicitors:
- The borrower will need need to cover the solicitor costs
- Most lenders will insist that the solicitor has construction expertise in-house
- The solicitors will deal with the construction and loan documentation
A good legal process will normally take up to 4 weeks. A bad process can take months.
3. Drawdown
Once the lender is happy with the completed valuation and QS reports, and the lender’s solicitor is satisfied, then funds will be sent to the borrower’s solicitor to complete the loan.
The current industry standard is 5-6 months to complete a development loan. At Brickflow, we aim to complete every loan in 5-6 weeks.
If you're looking for more information on applying for a development loan, for yourself or your clients, please get in touch - info@brickflow.com.