Commercial development finance for first-time developers
How to fund your first commercial scheme without a development track record.
Yes, first-time developers fund commercial schemes regularly, usually at lower leverage and with more weight on the professional team. An experienced main contractor, a clean appraisal with contingency, and a credible exit carry the deal. An experienced JV equity partner can fund the equity gap and strengthen the lender's view.
At a glance
- Fundable?Yes, at lower leverage
- What carries itThe professional team
- First-scheme equityOften 30 to 35%+
- Helps mostAn experienced JV partner
Can a first-time developer get commercial development finance?
Yes. Lenders fund the scheme and the people delivering it, so a limited personal record is filled by the strength of the team around you.
Expect slightly more conservative leverage and more scrutiny of your contractor and project manager.
Why lenders fund the team, not just the track record
A lender's real question is whether the scheme will be delivered on budget and on time. An experienced main contractor, project manager and professional team answer that even when the developer is new.
What lenders look for from a first-time developer
- An experienced main contractor or project manager
- A fixed-price or well-structured build contract
- A realistic appraisal with a sensible contingency
- Clear planning and a credible commercial exit
- A monitoring surveyor overseeing drawdowns
- Demonstrable equity in the scheme
A strong professional team and a credible exit can offset a thin personal track record on a first commercial scheme.
How leverage works on a first scheme
| Experienced developer | First-time developer | |
|---|---|---|
| Senior loan to cost | 65 to 70% | Toward the lower end |
| Day-one equity | 30 to 35% | Often higher |
| Stretch / mezzanine | Available | Harder until a track record builds |
Starting smaller to build a track record
Many first-time commercial developers start with a conversion or refurbishment before a full ground-up scheme, because the risk is lower and a successful project builds the record lenders want to see.
Ground-up, conversion or refurbishment for a first scheme
| Route | First-scheme profile |
|---|---|
| Refurbishment | Lowest risk, quickest record-builder |
| Conversion (e.g. office to use) | Moderate, planning-dependent |
| Ground-up development | Highest risk, needs the strongest team |
Using a JV equity partner or experienced partner
An experienced JV equity or development partner can both fund the equity gap and strengthen the lender's confidence in delivery, which is often the fastest route to a first funded scheme.
The role of the main contractor and professional team
On a first scheme the contractor's track record effectively stands in for yours. A reputable contractor on a fixed-price contract, with an experienced QS and project manager, materially de-risks the lender's view.
How to present your first commercial scheme
- Lead with a clean appraisal: land, build, fees, finance, contingency, GDV and margin
- Set out the team and their commercial track record
- Show the planning position and the build contract
- Explain the exit: investment sale, letting or stabilisation
- Evidence your equity and its source
Common reasons a first scheme is declined
- A thin or unrealistic appraisal with no contingency
- An unproven team with no experienced contractor
- An unclear or undeliverable commercial exit
- Too little genuine equity in the scheme
Worked example: a first-time conversion scheme
A common first commercial project is a small office-to-use conversion: lower build risk than ground-up, and quicker to deliver.
| Figure | Amount |
|---|---|
| Purchase + works | £1,200,000 |
| GDV | £1,650,000 |
| Senior at 65% of cost (first scheme) | £780,000 |
| Day-one equity | £420,000 |
On a first scheme the lender holds leverage toward the lower end, so the developer funds a larger share, usually with an experienced contractor named on the build.
What changes on your second scheme
| First scheme | Second or third scheme | |
|---|---|---|
| Leverage | Lower end of senior | Full senior, stretch available |
| Pricing | A premium for no record | Keener as the record builds |
| Mezzanine | Harder to secure | More accessible |
Delivering a first scheme on budget and on time is the single best thing you can do for the terms on your next one.
Questions to expect from a lender
- Who is building it, and what have they delivered before?
- What is the fixed-price contract and the contingency?
- What is the exit, and how certain is it?
- Where is your equity coming from?
What counts as a first-time developer?
To a lender, a first-time developer is anyone without a completed commercial scheme of comparable size and type to evidence.
Property experience in another form, as an investor, landlord, contractor or surveyor, helps, because it shows you understand cost, programme and risk even without a development track record.
Do you need experience to get development finance?
Not your own, but experience must sit somewhere on the scheme.
A lender funds the delivery risk, so an experienced main contractor, project manager or JV partner can supply the track record the developer lacks. A scheme with no experience anywhere in the team is the hardest to fund.
Typical loan terms for a first-time developer
| Term | First-time developer |
|---|---|
| Loan to cost | Toward the lower end of 65 to 70% |
| Loan to GDV | Up to about 60% |
| Rate | A small premium over experienced terms |
| Term | 12 to 24 months on a first scheme |
First-time developer interest rates and costs
Expect to pay slightly more than an experienced developer on the same scheme, because the lender prices the additional delivery risk.
The premium narrows as you complete schemes. The fastest way to a keener rate is a strong contractor and a clean, deliverable appraisal.
How much can a first-time developer borrow?
Leverage is held toward the lower end on a first scheme, so a first-time developer typically funds a larger equity share than an experienced one.
An experienced JV partner can lift the effective leverage by funding the equity gap and reassuring the lender on delivery.
Why a smaller first scheme helps
A refurbishment or conversion is lower build risk than a ground-up scheme, so it is easier to fund and quicker to complete.
Delivering one successfully builds the track record that unlocks higher leverage and keener pricing on the next, larger project.
How to improve your chances of approval
- Name an experienced main contractor on a fixed-price contract
- Present a clean appraisal with a realistic contingency
- Secure planning, or show a clear, low-risk planning route
- Evidence a credible commercial exit
- Bring genuine equity, or a JV partner who does
Building a track record across schemes
The fastest route to better terms is a completed scheme. Each delivered project moves you from first-time to experienced in a lender's eyes.
| After scheme 1 | After scheme 3 | |
|---|---|---|
| Lender view | Proven, not new | Experienced developer |
| Leverage | Full senior range | Senior, stretch and mezzanine |
| Pricing | Keener | Best available for the sector |
Start with a manageable conversion or refurbishment, deliver it on budget, and use it to unlock the leverage and pricing that make the next, larger commercial scheme work.
Should you use a partner or go it alone?
On a first commercial scheme, an experienced JV or development partner often pays for itself: it fills the equity gap and reassures the lender on delivery, which together can be the difference between a funded scheme and a decline.
As your own track record builds, the case for sharing profit with a partner falls away, and more of the upside stays with you.
Flipping, holding or developing: which suits a first scheme?
First-time developers usually take one of three routes, and lenders view each differently.
- Buy, refurbish and sell (flipping): quick, lower build risk, often bridged
- Buy, refurbish and hold or let: needs a term-debt or stabilisation exit
- Ground-up development: highest risk, needs the strongest team
A first scheme that refurbishes a tired commercial building, or converts it to a new use, is the most fundable starting point.
Ground-up development as a first project
Ground-up construction is the hardest first scheme to fund, because the build risk is greatest and there is no existing building to fall back on.
It is possible with a strong main contractor on a fixed-price contract, a generous contingency, and ideally a JV partner who has built before. Most lenders hold leverage lower and price for the risk.
Short-term finance options for new developers
First-time developers draw on the same toolkit as experienced ones, matched to the project:
| Need | Product |
|---|---|
| Buy a site fast or at auction | Bridging finance |
| Refurbish and sell | Bridging or refurbishment finance |
| Build out a scheme | Development finance |
| Hold a completed, let asset | Commercial mortgage / term debt |
What information to prepare
A complete information pack is what gets a first-time developer taken seriously. Have ready:
- A line-by-line appraisal: land, build, fees, finance, contingency and GDV
- The build contract and the contractor's track record
- Planning consent, or a clear and low-risk planning route
- Comparable evidence supporting the GDV
- Proof of your equity and its source
Mistakes to avoid on a first scheme
Beyond the appraisal errors that get a scheme declined, first-time developers most often come unstuck during delivery:
- Underestimating the build programme and running past the term
- No contingency for the surprises a first build throws up
- Choosing a contractor on price alone
- Leaving the exit, sale or refinance, too late to arrange
The factors a lender assesses on a first scheme
On a first-time developer scheme, a lender weighs five things in particular:
- The strength and record of the main contractor and team
- The realism of the appraisal and the contingency
- Planning certainty and any conditions attached
- The exit, and how clearly it is evidenced
- Your equity, and where it is coming from
Strength in the first three can offset a developer who is new, which is why the team matters so much on a first scheme.
Can you get development finance with no experience and no deposit?
It is the hardest combination, but not impossible on the right scheme.
It needs a profit-rich project, an experienced JV or development partner to fund the equity and carry the delivery record, and a clear exit. The partner effectively supplies both the deposit and the track record the lender is missing.
How lenders treat experience from other property work
If you have not developed before but have related property experience, use it. Time as a commercial landlord, investor, contractor, surveyor or agent all counts toward a lender's confidence.
It shows you understand cost, value, planning and risk, which is most of what a lender is really testing when it looks at a first-time developer.
A first scheme from offer to drawdown
The path is the same as for an experienced developer, with more scrutiny at each step:
- Indicative terms agreed on the appraisal and team
- Valuation and a quantity surveyor's review of costs
- Legal due diligence and the build contract checked
- First drawdown at completion, then staged build funding
Commercial development finance for first-time developers: common questions
Do I need development experience to fund a commercial scheme?
Not necessarily your own. Lenders weigh the whole team, so an experienced contractor or project manager and a credible exit can offset a limited personal record, usually at lower leverage.
How much equity will a first-time developer need?
More than an experienced developer, often toward 30 to 35 percent of cost or higher. A JV equity partner can fund part of that gap and strengthen the lender's view of delivery.
Should my first scheme be ground-up or a refurbishment?
Many first-time developers start with a refurbishment or conversion, which is lower risk and builds the track record lenders want before a full ground-up scheme.
What is the most common reason a first scheme is declined?
A thin or unrealistic appraisal, no contingency, an unproven team with no experienced contractor, or an unclear commercial exit.
Can a JV partner help a first-time developer?
Yes. An experienced JV equity or development partner funds the equity gap and strengthens the lender's confidence in delivery, often the fastest route to a first funded scheme.
Ready to fund a scheme?
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