Once a property development project is close to completion there is always a period of time where the developer will experience a shortfall in cashflow. This is where property development exit finance can be utilised.
Exit finance is required once all properties on the specific development have been built but are not all sold. Putting a finance deal in place means time can be extended for the sale without too many financial implications. It also allows additional borrowing, which can free up cash to then be used for starting a new development project.
Due to the nature of CBILS (Coronavirus Business Interruption Loan Scheme) finance it is proving to be a very popular choice to be utilised as property development exit finance. Key features for this provision are:
- It can be used for either first or second charge security over a development funding
- Nothing to pay of the first 12 months with the government paying the interest on the finance for the first 12 months
- APR of 4 to 7% on borrower only repayments
- Apply for up to £500,000 over a 24-month term
If you would like to consider a CBILS application, then eligibility criteria are as follows:
- Businesses can apply if they have been adversely impacted by Covid-19
- The business must be classed as an SME with an annual turnover of not more that £45m.
- A business has to generate more than 50% of its turnover by completing commercial activities
- The business should not have had any financial implications or difficulties prior to 31st December 2019
- A business would be eligible for funding even if it had not been impacted by Covid-19
To discuss how you can use CBILS for property development exit, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.