Neither a borrower nor a lender be

“Neither a borrower nor a lender be,  for loan oft loses both itself and friend”

If we followed Shakespeare’s advice we wouldn’t do any business but it does reveal that caution is certainly required when lending; that’s why lenders try to make sure they’re doing it right.

So, as a property developer, what is the best way to make sure you’re presenting your case correctly to a funder?

When funding developments, lenders are as keen as you to get a successful conclusion to a deal.  It not only gives them their return on that deal but also opens the door for possible future funding opportunities.

Successful lenders have a vast experience of funding many different development scenarios and it would be wrong for the borrower to automatically assume that they know better than the lender.

The best approach for the client is try to put yourself in the lenders shoes.

Can you show you have the ability to make it happen?

If it were your money you were lending, you would want to examine the proposal in very fine detail. You would want written proof plus pictures and recommendations, etc, etc.

You would also want to be very comfortable with the person to whom you are giving your money. You would have to make a judgement on that person, which is not an easy task.

You would get to know the person hoping to borrow from you; spending time finding out about them and their experience.

Lenders must do this in every case; so in understanding their needs, you’ll be able to present your case to its best possible advantage.

As the borrower, you have a big advantage. You will have an inside track to an area you’re working within.

You understand local demand and the cost for the team you work with; assuming all these costs stack-up, the next thing you must demonstrate is your experience.

I believe pictures are a great way to present to lender’s credit committees, as they speak louder than words.

But to quote Burns, the Scottish Bard:

“There is no such uncertainty as a sure thing.”

Written by John Dalby, Executive Consultant Scotland for BLG Development Finance and literature lover.

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