Development finance is released in stages against work that has been done and verified, not in a lump against a promise. For a first-time borrower that is the main difference from any other loan, and the practical consequence is that the quality of your cost information decides how smoothly the money arrives. Getting that information into the shape a funder expects is the whole point of funding preparation.
What follows is the pattern common to most development facilities. The detail differs between lenders and between deals, so the specifics always come from the facility being offered rather than from a previous one.
Before the facility: the four things being tested
First, the appraisal. A funder wants to see that the scheme works with a margin, and it will test the sales or rental assumptions against its own valuation advice. An appraisal that only works at the top of the evidence range is a slow conversation.
Second, the cost plan. The question is whether the construction figure is built from measured quantities and stated assumptions, or from a rate. A funder reading a cost plan is looking for the exclusions as much as the total, because the exclusions are where the surprises live. A funder will also check the order in which money goes in, because equity is commonly drawn before the debt or alongside it in a fixed ratio, which decides when your own cash is actually needed. The reasoning behind that is set out in the five costs first-time developers leave out.
Third, the team. Who is managing the scheme, who is measuring and certifying, who is designing, and whether the contractor has built this type and size of scheme before. A strong team reduces the lender’s risk and that shows up in the terms it offers.
Fourth, the contract. What form of building contract, who carries design risk, how payment and retention work, what happens on delay, and whether the contract sum matches the cost plan the facility was sized against. Those choices are made during procurement and contractor selection and they are hard to change afterwards.
The monitoring surveyor sits between you and the money
Most development facilities appoint a monitoring surveyor to act for the lender. Their job is to advise the funder on whether the scheme is where it is said to be, whether the money drawn so far matches the work in place, and whether what is left in the facility is still enough to finish the building.
That role is independent of you, and it should be. It is also the role that determines the pace of your drawdowns, so understanding what it needs is practical rather than political. A monitoring surveyor who receives a clear valuation, a current cost report and the supporting information in the same format every month will certify faster than one who has to reconstruct the position.
Reltic acts as monitoring surveyor on lender instructions and as the borrower’s surveyor on other schemes, never both on the same one. The information each side needs is the same information, which is why preparing it properly shortens the process for everyone.
At each drawdown: what is actually examined
The recurring questions are narrow. What work has been completed since the last release, measured rather than reported. What that work is worth under the contract, including any variations properly instructed and valued. Whether materials being claimed are on site and protected. Whether retention has been applied correctly.
Then the forward-looking half. What is the cost to complete, and is the remaining facility plus remaining equity enough to cover it. How much contingency has been used, and is what remains proportionate to the risk still ahead. Whether the programme has moved, and what that does to interest and to the sales period.
That second half is where facilities get into trouble, because a scheme can be fully paid up to date and still be unfundable to completion. We go through the mechanics of that in cost to complete and why it matters more than spend.
What usually delays a release
Variations instructed without being valued, so the sum claimed cannot be supported. Claims for materials that are not yet on site. Work that is genuinely complete but not evidenced, with no photographs, no measurement and no supporting records. A programme that has slipped without explanation. Contingency drawn early on specification upgrades.
Most of these are information problems rather than money problems, and all of them are avoidable. The fix is the same each month: measure the work, value the variations as they are instructed, keep the cost report current, and raise the bad news in the report rather than letting it be discovered. That discipline is the substance of delivery and cost control.
What to have ready
A cost plan built from measurement, with exclusions stated. A contract that matches it. A programme that someone has interrogated. A monthly reporting format agreed before the first drawdown rather than invented at it. And one person responsible for the numbers, so the lender is not receiving three versions of the position.
It is worth agreeing at the outset who certifies what. On most schemes the borrower’s surveyor values the work, the contract administrator certifies payment under the building contract, and the monitoring surveyor advises the lender on the release. Those are three separate acts, and confusing them produces the month where everyone believes somebody else has signed something off.
Prepared that way, the drawdown process becomes administrative. Prepared badly, it becomes the thing that sets your programme, because work stops when money stops. The measurement underneath all of it is ordinary cost control and variations work, run inside development management.
This article is general information, not financial, investment or legal advice.
Preparing a scheme for funding?
We build the cost information a funder will test, and keep it current through every drawdown.