When significant work needs to be done on a commercial property or the site on which it stands – for instance, one which has fallen into disrepair or where there is a change in use –this is covered by development finance.
Because the property itself is being taken as collateral, this is a low-risk and so relatively low-cost lending type. Repayment periods can be longer than short-term lending, though there is overlap between the two finance types.
Lenders will want to know full details of the proposed development, including proposed contractor, build programme and satisfactory exit route. Many will insist on the developer having a good level of experience.