3 ways to overcome declined applications

January 17, 2023

As the saying goes, things cannot be restored to how they were before when the genie is out of the bottle. There is some truth to that about development lending but let's keep it from getting to this stage. Instead, could you focus on the phrase, 'prevention is better than cure?' It will reduce or avert the disappointments and heartaches a developer would have otherwise experienced.  

In this article, we will show you how to overcome declined property development applications in three preventable ways.


Presentation is your best ally.

From a developer's standpoint, submitting a development finance application can be a nerve-wracking experience, particularly if the said developer read or listened to our previous work on, On-demand webinar: Why development finance lenders decline applications.

Lending institutions are generally curious by nature. They are that way inclined because they want to protect their balance sheet.

What does that mean?

A balance sheet is a financial statement that reports a company's assets, liabilities, and shareholder equity. Hence, submitting an application with detailed and supporting information will be of much greater interest to lenders of a nervous disposition rather than a proposal on a napkin. Lenders' decisions are made based on credit risk and security. The era of an A4 single-page approach is long gone. In today's assessment of applications, the expectation is for a thorough and well-researched development appraisal, including a developer's CV, build cost breakdown, a specification schedule, and cash flow forecasts. That is just for starters. In addition, the lenders want to see the developer's project vision. In one sense, it's only deemed believable with clear evidence that the developer is well-versed and experienced in property development.   


Lenders want assurances that the developer and contractor(s) have sufficient experience and skills to complete the project successfully. They are not just going to take their word for it. A 'CV' of the developer's previous projects, including specifications, sales particulars, photos, and prices achieved compared to the original plan, will help to convince the lender that the developer is, in fact, an experienced developer. 

Preparation is essential; a lender considering a new development finance application will be more likely to approve the request if they feel the planning and documentation represent a low-risk investment. Conversely, an application that doesn't include contingency budgets or doesn't explain the exit strategy may pose too much risk or be viewed as an unviable project. This equates to a balance sheet red flag. 

Information & data accuracy

To the lender's common-sense expectation, could you make sure the data and figures are accurate on your development finance applications? It seems obvious, but it's common to use projections and estimates in a development finance application. Those estimates are always subject to professional or personal judgement. Still, your lender will want to see how you have arrived at predictions to make sure they are based on sound, quantifiable figures.

Every budget estimate you use in your development financing projects should meet both of the following requirements: 

  • Could you make sure all the figures make sense and that they add up? (Develop an accountant mindset if you have to.)
  • Use reliable, quantifiable estimates for unknown financial variables.  
  • This is where prevention is vital. Being mindful of mistakes on an initial application will significantly increase the chances of rejection. In addition, tI think thorough final checks of your data are essential before submission.
  • It would help greatly to have a good contingency plan.

That means evidencing sources, such as quotes from reputable contractors,  the use of market appraisal tools, or using published data in the public domain, such as property sale prices achieved for similar developments in your chosen location. 

Market appraisals

The lender needs to see detailed specifications of the project a developer wishes to undertake. This includes floor plans, as well as details about the materials to be used. With all the details listed, the developer can then create an evidence-based budget and build the schedule for their project. From this point, they will know the loan amount they need during each month of construction, and they can present it clearly to the lender.

In true fashion, here is one we prepared earlier; you can read more about Why a well-developed appraisal is needed to secure development finance.

At Proverest, our marker appraisal is designed as a tool to license any developer or individual with or without extensive financial modelling experience to create and manage development appraisals.

By the team at Proverest, Published January 17, 2023

Proverest Administrator

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