5 key lender considerations when seeking development finance

Written by David Lovato – CPC Lending Solutions

July 2025

When applying for development finance, understanding how lenders assess risk can significantly improve your chances of approval. Beyond the numbers, they evaluate the project’s viability, your experience and the safeguards in place if things don’t go as planned. 

Here are five core considerations:

1. What level of security can the borrower offer?

Security gives lenders protection if the loan isn’t repaid. In development finance, this usually includes:

• First mortgage over the site – This is the main form of security, giving the lender the right to sell the land if the loan defaults.
• General Security Agreement (GSA) – Covers broader business assets like equipment, IP, and income rights.
• Directors’ personal guarantees – Adds extra assurance by making you personally liable if the company defaults.

The stronger the security, the more favourable your funding terms are likely to be.

2. What experience does the borrower and project team have?

Lenders prefer borrowers with a proven track record. They’ll assess your past projects and your team’s experience, including the builder, project manager, and consultants. A capable, experienced team gives lenders confidence that the project will be delivered on time and within budget.

3. What level of funding is required?

Be clear about how much funding you need and how it compares to the project’s value and cost. Lenders look at:

• Loan-to-Value Ratio (LVR)
• Loan-to-Cost Ratio (LCR)

Lower ratios mean lower risk, which can lead to better terms. Having your own equity invested is also viewed favourably.

4. Is the project profitable?

Lenders want to see that the project has a healthy profit margin. A well-prepared feasibility, supported by budgets, timelines and market data, helps build confidence. Pre-sales can further strengthen your case by showing demand and providing a clearer loan repayment pathway.

5. Are there contingencies and an exit strategy in place?

Lenders want to know you’ve accounted for risks like delays, cost overruns, and planning issues. A clear exit strategy – whether through pre-sales, asset sales, or refinancing – is essential. Strong risk management and a defined loan repayment plan go a long way in securing approval.

Need expert guidance? CPC Lending Solutions specialises in development finance for land, construction, and residual stock. We help structure your application and connect you with the right lender. Email us at info@crowdpropertycapital.com.au or contact us here.