How to get lending approved easier
Play the man not the ball
A sporting analogy that explains why businesses can struggle to raise finance and property developers can find it difficult to secure funding for their next project.
What do I mean by play the man not the ball?
It is about taking into account the external factors of the game rather than just concentrating on the ball. Take rugby as an example.
I kn0w today is pretty wet and windy, I also know the opposition player has dropped the ball a few times when looking to catch it. That player is feeling under pressure, so you start kicking the ball high and toward that player, you are playing the man and not the ball.
For example, the same applies in golf. I know some players don’t like being reminded of an upcoming water hazard or bunker, so I may mention it more than a few times. If the wind is blowing I may compensate by aiming slightly into the wind, or I may play the ball low to avoid the effect of the wind. In both cases I am taking into account the external factors rather than just concentrating on the ball itself.
This is one of the main reasons why businesses can find it harder to raise finance and property developers find it more long winded to get that development funding in place.
How does it work?
Different lenders like different things. They look for certain facts that they want and certain facts they do not. Most commercial borrowers will present the facts as they are, explain the project, why it works, how it works and assume this is enough information to get the lending that they were after.
They played the ball, not the man.
Give the lender the information they want in the way they want it. Don’t give everything to a lender that was never going to do the deal and don’t assume because the proposal makes sense the lender will either understand it or want to lend on it.
You need to play the man, not the ball.
The Property Developer Example
Let me give you a real world example. A developer has built 10 apartments, they were going to sell them and have now decided to keep them and remortgage onto a buy to let loan. We have 10 units all on one single freehold title.
The rental income is good and the loan to value ratio is sensible.
If the developer takes that proposal to 10 different lenders they will likely all say they want to see the deal and take a look. Sounds positive. In reality, most of these lenders won’t do the deal.
It is nothing to do with the client or the proposal, it is just not their cup of tea, it doesn’t fit what they want to do or what they really understand.
Why do lenders struggle?
We see lenders have criteria that they will only lend on up to 6 or 8 units on one freehold, that they won’t lend on newbuilds, that they want separate leaseholds created, or that if the development is over 3 stories they want it to have a lift. The criteria can be very bespoke but because lenders go outside of their standard policy now and again, they will likely want to look at your proposal even though it was 99% certain not going to go anywhere.
What we do, is know what lenders want down to the very fine detail. We know what the lenders aren’t great at telling you and know who will do what deal.
We help you play the man, not the ball.
It means you save a lot of time, effort and money. You aren’t pulling your hair out wondering why nobody understands what makes perfect sense to you.
Business and property lending, let us help and play the man not the ball.
Any questions or if you have a proposal that nobody seems to understand then give us a bell.
By Dave Farmer