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There are several ways to arrange property development finance and several types of lenders in the market. What is common to them all is their need to understand and to have confidence in the way that they are going to be paid back. So, lenders will ask a number of questions at application stage about how this is going to be achieved and they will form an opinion on the credibility of the borrower’s strategy. That opinion is no less important than all the other aspects of the loan application and if the lender does not believe in the strategy, then the loan will not be forthcoming. By definition, if you are engaging in a property development, it is only going to last as long as the building takes, which tends not to be very long, usually about 12 months. If you require finance, including to buy, then it will reflect the same time period. At the point that the money is lent, the lender does not have a finished house to lend against. This will only be the case when the project is finished. If anything were to go wrong during the building phase and the lender wants to repossess, it will be the lender who has to sort out the problems and organise the completion on the building. This is neither something that they want to do, nor have in house expertise to do. Their business is lending money and not building houses. (The circumstances under which a development lender would repossess a project is covered in other articles). This risk that the lender takes is reflected in the interest rates paid for this type of finance. Lenders in this market do not want to be involved in long term loans; their business strategy is short-term lending, their

What Are Spain Bridging Loans? Bridging loans for Spain are a specialist kind of loan designed solely for shorter term usage to provide a temporary cash flow solution or ‘bridge’ before additional permanent finance becomes available. The method for obtaining a bridging loan is straightforward and really versatile with a more flexible set of criteria than is usually required by most high street banks and mortgage lenders. Like a mortgage, a bridging loan is secured against your property. With bridging a realistic and viable exit will be required by the lender. How Do Bridging Loans for Spain Work? Bridging loans are frequently utilised as an answer to a temporary cash flow problem. A common example of this type of situation is when a person wishes to buy a property but still needs to sell their existing home. A bridging loan can, in these circumstances, provide a solution by offering short term funding. Bridging loans may be offered in amounts ranging from £50,000 to several million, depending on your circumstances and which lender you approach. Click here for more information on large bridging loans Bridging Loans Can Be Used For: Bridging the gap between purchase and sale – Secure a property quickly before it is snapped up by another buyer – even if you have not yet sold your current home Downsizing – Timings between buying and selling an existing property are rarely aligned. A bridging loan can smooth the process. Mortgage chain issues? – Secure your ability to buy even in the event that the home buying chain breaks down – for example, if the sale of your old house falls through, a bridging loan can allow you to still have sufficient funds to purchase the new house Buying an auction property?  – Use a bridging loan to pay the required percentage needed

When in need of financing a company stands before the choice of whether to use debt or equity financing. Debt financing is when funds are borrowed from for example a bank or a friend, whilst equity financing is when an investor receives ownership interest in the company in exchange for funds or assets. Debt as well as equity can be structured in different ways, and the distinction may not always be fully clear, as the case may be with convertible debentures or loans where the interest rate or repayment obligation is correlated with the results or financial standing of the Company. Two of the main advantages of traditional debt financing are that the creditor does not get any direct influence over the business and that the relationship with the creditor usually is terminated when the debt is repaid. On the downside, debt financing is normally subject to interest, which varies depending on the risk the creditor takes by lending money to the company. The repayment may also slow down the development of the company and if the debt is not repaid it may lead to bankruptcy. As creditors can be reluctant to provide loans to smaller companies, the debtor might be asked to deposit securities or to comply with certain specified requirements. For smaller companies this often entails that the people behind the company may be asked to deposit securities and the fact that the company is limited by shares may thereby be circumvented. Loan facilities are also often combined with covenants and undertakings, granting the creditor influence and control over the Company. Through equity financing, the investor takes all the risk and repayment of the funds (typically through dividends) can only be done when this cannot lead to bankruptcy or otherwise significantly disrupt the company’s operations. The downside is