Advice to Developers about Project Financing
Developer finance is a special case, as any experienced developer will attest. Traditional finance sources, such as banks, generally will not finance undeveloped land even for developers with considerable experience and good credit and other financial standing.
Most small developers must rely on financing from investors in their own community that know them or know of them. This finance is usually very expensive in terms of the amount of profit that can be generated by the developer through improvement of the usefulness and value of the land. Moreover investor finance runs out at the point of about $5 Million.
Well-established and very experienced developers with projects above the $50 Million range generally have access to financing from money center banks. However developers with projects ranging from $5 Million to $50 Million have no established source of financing.
With this in mind we have set out to find ways of providing capital for developers with good projects in the $5 Million to $50 Million range and for exceptional projects slightly smaller or larger than that range. We have developed a network of lenders and a few investment funds that will participate in loans to developers.
Developer loans can move quickly. It is possible to secure a commitment in two weeks or less and close a developer loan in 30 Days or less. Obviously this is dependant on how fast the developer and their attorneys can move with due diligence and closing matters. Our services for developers are geared to the relatively fast timetable for developer finance and that is why you will find provisions in our agreement that provide for payments to us if you drag your feet and a requirement that you close within 30 days of commitment. We can, of course accommodate special project needs and delayed closings if they are discussed with us early enough in the process.
We are one of very few investment banks experienced in financing developers. Allthough you will be paying us for the services we provide you, you will get considerable value added to your current and future projects from your association with us. In general, a developer loan, even with the fees and expenses associated therewith, is cheaper and much easier to work with than getting the same amount of support from an investor, assuming the developer could find an investor or group.