Based Upon Credit Policies And Lending Products Of The Banks
PROPERTY DEVELOPMENT PROFESSIONALS PRESENT
their FUNDING PROPOSALS
IN THE MOST EFFECTIVE
AND IMPACTFUL WAY
How To Present Persuasive Project Finance Proposals
Selective appetite by the major Banks highlights the importance of preparing an effective Funding Proposal to present the Project with the best chance of achieving an optimum and timely outcome.
Use the credit policy of the Banks to compel them to fund your transaction. Get unconditional loan approvals from multiple banks.
Complete all of the various ratio analysis - by doing the maths yourself - and attach all project and financial documentation the property banker needs to make a decision. Identify the key risks and their mitigants. Prove how the Bank can get their capital back out of the deal - in at least three ways - before they put their capital into the deal.
Then set up a competitive template between 2 or 3 major Banks to negotiate the best possible pricing and policy in terms of Establishment Fee, Line Fee and Credit Margin over the Banks Cost of Funds (the 30 day bank bill rate) to lower the effective Interest Rate.
Reduce the amount of interest capitalisation and increase the size of the contingency fund required during the term of construction.
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Negotiation of the all important Loan to Cost Ratio by obtaining the Banks maximum - thereby reducing the amount of Equity input required by the Project Sponsor - is the objective of a powerfully persuasive Project Finance Proposal. This is the purpose of the structures and mechanisms contained within it, all of its supporting documentation and its final recommendation.
Funding Proposals vary with the complexity of the Project, but should at a minimum clearly outline the project and sponsor capability, the quantum of the facility and exit strategy for Bank pay-out. It can be prudent to highlight material risks for early discussion, but the Funding Proposal should be based on ‘market-achievable’ terms, and highlight any non-negotiable points by the Project Sponsor.
Professional Project Finance Proposals underwrite the success of your development by making it easy for the bank to approve on the terms proposed. Velocity is value in development finance.
