This weekend we had a bbq at home, when I thought about it the day after, it struck me in some ways our bash was a bit like development finance. It wasn’t a big affair, nothing fancy but the Wife and I still wanted it to go well.
Plans were in place, food and drink bought, the weather was perfect and the guests were in good spirits.
I know that the general idea is that the man of the house cooks the food on the barbecue while drinking a beer and laughing with the other men that assemble around the grill. One of our friends was, in a different life, a chef, though, and he’d offered to cook for us.
I gratefully accepted.
To say no to his kind offer would have been a bad idea, for various reasons. I can’t cook is the main one. I probably could be half decent if I committed to it but at the moment I don’t have the experience and I didn’t want to gamble on the assembled’s health that I can pull it off.
The chances are it would have taken longer to get burgers and sausages out and with some over cooked, possibly some under, the quality would be questionable.
Overall the “event” would not have been the roaring success it was – in my humble opinion!
You might be seeing where I am going with this.
Development finance can be seen in a similar way.
You could arrange the finance yourself. As cooking is just about timing and making sure burgers don’t burn, in theory, finding a lender is a case of google and a few calls.
The practice as you might have already found, is quite different.
You have to give the same information to multiple people, which is tedious for one thing. They will then tell you what they think they can do for you. It might not be the best in the market, it might not be the most cost effective, it’s just what they have.
They may or may not be experts themselves, so might not even ask you the right questions. This can end up with you having a quote or decision in principle that is utterly meaningless.
Are the figures you get even telling you the whole story? Take an exit fee, for example. When quoted 2%, say, that could be 2% of the facility amount, balance of the loan at the end, Sales values, or valuer opinion of the gross development value. That can make the difference between a few thousand to tens of thousands of pounds.
You might not know their application process or that upfront fees are required, perhaps non refundable, before they do any meaningful work for you.
Their treatment of you while you are building your project might not fit with what you were looking for. Will they expect monthly reports, at your expense, or will they just need them at draw down?
I could go on but I hope by now you have the picture.
Using a good broker can save you all that heart ache and make sure your finance application runs as smoothly as possible.
As with the Barbecue, I could have muddled through and we’d have had something to eat, at some point and probably not been poisoned.
It would definitely, though, have been stressful and much less fun for all involved. The food wouldn’t be as good, that’s for sure and money would have been wasted on the bits people didn’t want.
Going alone arranging your finance could lead to you paying a lot more than you need and not dealing with the right company for you and your project.
Developing is difficult enough, don’t add to the stress, let’s talk about how I could help, today. You won’t have to pay an up front fee and you won’t be obliged to use Volo FS.
You’ll probably want to, though, so let’s talk