Packaging up a Credit Submission in the correct way can go a long way to ensure that your application for finance is successful.
No credit officer wants to slave through a 90-page document, which is why our Credit Submissions are not too long and cumbersome. A Credit Submission should be precise and focus on the key ingredients of the transaction. Other information in relation to the transaction should be included in the support documentation or annexures to the actual submission.
When it comes to the key ingredients, we like to use the acronym SEX;
This section is first and foremost all about the property. Questions to be answered during this section are:
- Where is the property located?
- What amenities are nearby?
- How big is the property?
- What is the approval status of the property? And what does that allow for to be constructed on the property?
- What is the value of the property?
- What will the end value of the project be?
- Is the project feasible from a financial standpoint?
- Is there any existing debt secured by the property?
- Are the property impacted by any adverse overlays? i.e flood impacted, cultural heritage issues, undermining, protected fauna and flora
This section is all about how the lender will get their money repaid. Questions to be answered during this section are:
- Is repayment dependant on sales, refinance or a combination of both?
- Are there any pre-sales?
- What is the product mix?
- Are they priced at the correct level for the current market?
- Does the market have an appetite for the style of product?
- Are there any rental or lease agreements in place?
- What will the Loan to Value Ratio be at completion?
- What is the appetite from lenders for a potential refinance?
This section is all about the sponsor and key stakeholders of the transaction. For many lenders this is the most important aspect of all. There is an argument to be made that if you follow a great sponsor, then you can trust them to make smart decisions regarding location and style of development. Questions to be answered during this section are:
- Who is the sponsor?
- What experience do they have in the delivering the style of project?
- What is the financial capacity of the sponsor? Can they cover any unforseen cost overruns during the project? Do they have a clean Credit history?
- What security is the sponsor prepared to offer? Personal Guarantees, Corporate Guarantees etc.
- Who is the builder or the principal contractor?
- Does the sponsor have an existing relationship with the lender?
Discuss with BEDROCK Funding, how we can help in packaging your Credit Submission correctly for your current or next development project.
At BEDROCK Funding we work in the Construction Finance Industry EVERY DAY and we will welcome the opportunity to assess your next project and provide you with a no obligation complete Funding Overview. Contact us at 1800 BEDROCK or visit our website at www.bedrockfunding.com.au