Funding

Lending money for construction, particularly new construction, is riskier than many other types of lending. For starters, construction is a complex undertaking with many potential pitfalls. It requires a strong ownership group with a defined plan for finished facilities. And it demands a skilled project team to deliver your build on-time, on-budget and to high quality standards. Lenders want to know your project will succeed, so they’ll take measures to evaluate your project’s viability and their risk.

To get a permanent loan, you’ll need a valuable facility that’s achieved stabilization and a venture that’s making more money than you owe. Lenders measure this primarily using your debt service coverage ratio, or DSCR.

Debt Service Coverage ratio:

Net operating Income (NOI)/ Total Debt service

Any DSCR number greater than 1.0 means the property is generating enough income to cover its debt (NOI is greater than debt service). And that’s what lenders require. In fact, many lenders want to see a DSCR of 1.25 or better. A ratio greater than 1.25 can help you get not only a permanent loan, but also secure a more favourable interest rate.

Lenders will usually also require your business to have a positive cash flow. This means having a net income greater than all expenses, including tax write-offs, depreciation and interest.Lenders want to see that your property achieves a value greater than the cost of construction.

Source of Financing a Construction Project:

• Bank Loan
• Providing Equity/ share in project against the investment.
• Obtaining Debt from private parties against collateral or guarantee.
• Foreign Investment.

We provide help the Real estate owners or builders by connecting them to potential investors for their construction project and obtain funding for their projects either against equity share or asdebt.