Property Finance
Development Finance for SME Property Developers
Development finance for small and medium-scale projects — new build, conversion, refurbishment and mixed-use schemes. Structured around build programme, project viability and exit strategy.
Typical deal size: Typically £100k – £10m
Overview
Development finance for SME developers requires lenders who understand smaller-scale projects and can work with developers who may not have institutional-scale track records but possess genuine expertise and viable schemes. The SME development market is served by a distinct group of lenders — from specialist development banks to private credit funds — whose criteria, processes and appetite differ significantly from institutional development lenders. We position SME development cases with lenders whose sweet spot matches the project scale, developer experience and scheme type, ensuring the funding structure supports the build programme and exit strategy.
Key Benefits
SME Lender Specialisation
Access to lenders whose appetite and processes are specifically designed for SME-scale development. These lenders understand smaller projects and can make decisions without institutional bureaucracy.
Build Programme Alignment
Staged drawdowns structured to match your build programme, ensuring capital is available when needed without paying interest on funds drawn too early.
Exit Strategy Structuring
Development finance structured with a clear exit — whether unit sales, refinance to investment lending or retention. Lenders require confidence in the exit and we ensure it is robust and well-evidenced.
Mezzanine & Stretched Senior
Where the senior debt alone is insufficient, we can structure mezzanine finance or stretched senior facilities to reduce the equity requirement, subject to scheme viability and overall gearing.
Common Scenarios
Ground-Up Residential Development
Development finance for new-build residential schemes, typically 2–30 units, including land acquisition (or land already owned) and full construction funding.
Commercial to Residential Conversion
Funding for permitted development or planning-consent conversions of commercial buildings (offices, retail, industrial) to residential use.
Refurbishment & Reconfiguration
Finance for significant refurbishment projects — including reconfiguration of existing buildings to create additional units or improve specification.
Mixed-Use Development
Funding for schemes combining residential and commercial elements, where the development appraisal must account for multiple end uses and exit routes.
Lender Considerations
What development lenders assess
Development lenders assess the scheme's viability (GDV, build costs, profit margin), the developer's track record and experience, the planning position, the build programme and the exit strategy. Most lenders require a minimum profit margin on cost (typically 15–20%) and evidence that the developer can manage the project to completion. A strong professional team (architect, QS, contractor) strengthens the case.
Equity and gearing requirements
SME development lenders typically fund 60–70% of GDV and up to 85–90% of build costs, with the developer providing the balance as equity. Equity can include land owned outright, cash and in some cases deferred land payments. Mezzanine finance can bridge the gap between senior debt and available equity, though this increases overall cost and requires the scheme to support the additional debt layer.
How It Works
Scheme Assessment
We review the development appraisal, planning position, build programme and your track record to assess viability and determine the optimal funding structure.
Lender Selection
We identify development lenders with appetite for your scheme type, scale and location — presenting a structured funding proposition that aligns with their criteria.
Application & Due Diligence
We manage the application process, coordinate the development valuation, respond to lender queries and facilitate the due diligence process including QS and monitoring surveyor appointment.
Drawdown & Completion
Once approved, we support the staged drawdown process throughout the build and assist with exit execution — whether that is unit sales, portfolio refinance or retention lending.
What Lenders Want to See
Planning consent — full planning permission or permitted development rights in place, with evidence that all conditions precedent have been discharged or can be discharged prior to drawdown
Development appraisal showing GDV, total costs, profit margin on cost and sensitivity analysis demonstrating the scheme remains viable under adverse scenarios
Build programme with realistic timescales, key milestones and contingency allowances for delays or unforeseen issues
Contractor details including their track record, financial standing, proposed build contract type and evidence of relevant insurance coverage
Quantity surveyor cost plan providing an independent assessment of build costs, with line-by-line breakdown and contingency provisions
Developer CV and track record showing completed projects of similar scale and type, with evidence of delivery on time and within budget
Sales or exit evidence — comparable sales data, agent appraisals or pre-sales for residential units, or refinance terms for retained assets
Common Reasons Applications Fail
Planning risk — consent not yet granted, subject to conditions that may not be achievable, or at risk of challenge or revocation
Profit margin on cost is below the lender's minimum threshold — most lenders require a minimum of 15–20% profit on cost
Developer track record insufficient for the scale or complexity of the proposed scheme
Build costs appear unrealistic — either too low (suggesting the scheme is under-costed) or too high relative to the GDV
Exit strategy is weak — insufficient comparable sales evidence, unrealistic pricing assumptions or no clear route to repayment
Insufficient equity — the developer cannot demonstrate the required financial contribution to the project
Frequently Asked Questions
Most development lenders require the developer to contribute 10–40% of the total project cost as equity. The exact requirement depends on the scheme, your track record, the lender and whether mezzanine finance is used. Land already owned at full value typically counts as equity. Some lenders offer higher gearing for experienced developers with strong track records.
Yes, though your options are more limited. Lenders need confidence that you can deliver the project, so relevant experience in property, construction or project management is important even if you have not completed a development before. A strong professional team around you and a straightforward first scheme improve the prospects significantly.
Development finance is drawn in stages as the build progresses. A monitoring surveyor (appointed by the lender) inspects the site at each stage and certifies the works before funds are released. This means you typically need to fund each stage and then draw down in arrears, though some lenders offer advance drawdowns for certain cost elements.
Yes, mezzanine finance can bridge the gap between the senior debt facility and your available equity, reducing the cash you need to contribute. However, mezzanine carries a higher cost than senior debt and increases the overall scheme gearing. The scheme needs to generate sufficient profit to service both layers of debt. We assess whether mezzanine is appropriate and viable for each specific scheme.
Development overruns are a significant risk that lenders assess carefully. Most facilities include contingency provisions, but if costs exceed the facility amount, additional funding may be required. Lenders may agree to facility extensions or additional drawdowns subject to the scheme remaining viable. We advise on appropriate contingency planning from the outset to minimise the risk of cost or time overruns.
Ideal For
- SME developers with a demonstrable track record of completed projects
- Experienced property professionals undertaking their first development
- Conversion and refurbishment specialists
- Small-scale housebuilders delivering 2–30 unit schemes
May Not Be Suitable For
- First-time developers with no property or construction experience
- Land banking without planning consent or a development timeline
- Very large-scale institutional developments above £15m
Ready to Discuss?
If your sme developer finance requirement is complex or strategic, speak to CC Finance.
Related Calculators
All finance is subject to status, lender criteria and individual circumstances. Deal sizes shown are indicative of typical transactions.
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