Funding your first development project: what lenders will and will not accept
Funding your first development project is less about finding a lender who says yes and more about building a case that answers the questions a track record would normally settle. This guide is the credibility playbook: what no experience actually costs you, the proxies lenders accept instead, the kind of first scheme they like, and how the exit is judged harder when it is your first time.
A first development project is funded by the same development finance lenders who back experienced sponsors, on terms adjusted for the track record you do not yet have. That adjustment shows up in three places: lower leverage, so the loan is held nearer 65 to 70 percent of gross development value than the 70 to 75 percent an experienced developer might reach; pricing at the higher end of the range; and a tighter structure built around an experienced main contractor, a special purpose vehicle and personal guarantees. Lenders will accept credible experience proxies in place of completed schemes, and they judge the exit harder on a first deal, which is why lining up the exit finance early matters. We arrange and place this finance as an introducer; we do not lend, and the lending is unregulated commercial debt. All figures here are indicative and never an offer of finance.
At a glance
- Who it is forDevelopers funding their first scheme
- What lenders adjustLeverage, pricing and structure
- Experience proxiesTeam, JV partner, trade or refurbs
- Best first schemeSmall, simple and consented
- Exit bridge pricingIndicatively 0.65 to 0.95 percent per month
- Status of figuresIllustrative only, not an offer of finance
What a missing track record actually costs on a first project
Development finance is short-term, project-based lending that funds the land and build costs of a scheme in staged drawdowns, priced on the risk that the project runs over budget or over time. On a first development project that risk cannot be read off completed schemes, so a development finance lender covers it in three specific ways rather than by declining outright. It lends a little less, it prices at the firmer end of the range, and it asks for a tighter structure around the build. Knowing which of the three is biting on your deal is the difference between negotiating and guessing.
The first cost is leverage. An experienced sponsor might reach a development finance loan to gross development value (LTGDV) of 70 to 75 percent, whereas a first-timer is more often held nearer 65 to 70 percent, which means more of your own equity in the land and the build. The second cost is price: a first development project usually sits at the top of a lender's rate range rather than the bottom, because the lender is carrying the delivery uncertainty. The third cost is structure, meaning an experienced main contractor, a special purpose vehicle (SPV) and personal guarantees that an established developer might negotiate lighter. These are indicative bands and illustrative only, not an offer of finance.
No lender expects a first-time developer to arrive with completed schemes. What they expect is that the missing record is visibly covered somewhere else in the deal, by the team, the equity or the margin. Treat your first application as a credibility exercise: every element that answers 'who delivers this on budget' buys back leverage and price. The gap is a cost to be managed, not a wall.
The experience proxies lenders will accept instead
Because a first development project has no completed track record behind it, development finance lenders look for proxies that carry the same reassurance. These are not soft points that decorate a development finance application; each one directly answers the delivery question and, stacked together, they replace the comfort a record would give. The strongest proxies are the ones that put experienced hands on the actual build.
- A strong professional team: an experienced main contractor working to a fixed-price JCT-style contract, plus a quantity surveyor (QS) and a monitoring surveyor, transfers most of the delivery risk to parties who have built comparable schemes
- A joint venture with an experienced partner: a JV partner or JV development finance funder whose completed projects and capital carry the track-record requirement on your behalf
- A relevant trade or construction background: time spent as a builder, main contractor, site manager, surveyor or architect is transferable experience a lender will weigh, even without a completed development in your own name
- Completed refurbishments or smaller works: a history of buy-to-let refurbishments, conversions or heavy renovations shows you can run a project, manage a budget and deal with contractors, which is a genuine step towards a ground-up scheme
- Property or professional adjacency: estate agency, lettings, planning or property investment experience that shows you understand values, demand and the local market
A lender rarely needs all of these. One or two strong proxies, most often an experienced main contractor paired with either a relevant background or completed refurbishments, is usually enough to make a first development project fundable at sensible leverage. We assemble these proxies into the case before a lender sees it, so the experience story is told clearly rather than left to be inferred.
Choosing a first scheme that lenders find easy to back
The scheme you pick for a first development project does as much for your development finance as anything on your CV. Lenders back first-timers most readily on projects that carry little of the risk they cannot yet trust you to manage, which means small, simple and free of planning uncertainty. An ambitious first scheme with unresolved consent and a complex build is the fastest way to a decline, however good the numbers look on paper.
- Small in scale: a handful of units rather than a large multi-phase site, so the equity required and the downside are both contained
- Simple in construction: a straightforward new build or a light conversion, not a structurally complex or heritage-constrained scheme
- Free of planning risk: bought with detailed or full planning permission in place, not on the hope that outline consent or a change of use will come through
- Backed by real margin: a gross development value that leaves a healthy profit on cost after finance, so the scheme absorbs a cost overrun without wiping out the equity
- Clearly saleable: a location and product with proven local demand, so the exit is credible before a spade goes in the ground
Of all the risks on a first development project, unresolved planning is the one lenders like least, because it sits outside your control and the contractor's. A site bought with detailed consent already granted is a fundamentally different proposition to one bought subject to a planning outcome. If you can only remove one risk from your first scheme, remove this one, and buy something already consented.
Building a funding pack that earns lender confidence
A first development project lives or dies on the funding pack, because the pack is where a development finance lender reads your credibility. An experienced developer can lean on a track record; a first-timer has to make the case explicit and evidenced. A complete, honest pack does more to win a first deal than any conversation, and a thin one invites the questions that lead to a decline.
- A realistic appraisal: a full development appraisal setting out land cost, build cost, fees, finance and gross development value, with a profit margin that survives a sensible cost overrun.
- Team CVs: short, honest profiles of you and your key people, foregrounding the experience proxies, the main contractor's completed schemes and the professional advisers.
- The contractor and build contract: the appointed main contractor, ideally on a fixed-price contract, with references and a costed schedule of works signed off by a quantity surveyor (QS).
- Planning and legal position: the planning consent, the site's title and any conditions, so the lender can see the scheme is deliverable as drawn.
- The exit: an evidenced exit plan, whether a sale supported by local comparables or a refinance, set out before the loan is drawn rather than left to the end.
The exit belongs in the pack from day one, not as an afterthought, because a first-time lender wants to see that the money coming back is thought through. Our criteria guide at /learn/development-exit-loan-criteria/ sets out what a fundable case looks like. We build the pack with the developer, pressure-test the appraisal and place it with the funder whose appetite fits a first-timer.
First-timer versus experienced sponsor: how the terms compare
The clearest way to see what a first development project costs is to set the likely terms beside those an experienced sponsor would expect on the same scheme. The table below is illustrative, and the real figures depend on the lender, the scheme and the strength of your experience proxies. It is not an offer of finance.
| Term | First development project (illustrative) | Experienced sponsor (illustrative) |
|---|---|---|
| Loan to GDV (LTGDV) | Up to around 65 to 70 percent | Up to around 70 to 75 percent |
| Loan to cost (LTC) | Around 80 to 85 percent | Up to around 90 percent |
| Equity required | Larger, land plus a real share of build | Smaller share of total cost |
| Pricing | Firmer end of the lender's range | Lower end of the range |
| Contractor | Experienced main contractor expected | More latitude, may self-deliver |
| Personal guarantee | Usually required from the directors | Often required, sometimes lighter |
| Exit scrutiny | Tested hard and evidenced early | Assessed with more latitude |
The pattern is consistent: a first development project trades a little more equity and a slightly firmer price for access to the same development finance market. None of this is punitive; it is how a development finance lender bridges the gap between a first-timer and a developer with completions behind them. As you complete schemes the leverage rises, the price eases and the structure loosens, which is why a first project is the one to build conservatively. The figures here are indicative rather than an offer of finance.
Why the exit is judged harder on a first deal
The exit is where a first development project is scrutinised most closely, because it is how the development finance is repaid and the point at which a first-timer is least tested. An experienced developer has sold or refinanced completed schemes before; a first-timer is asking a lender to believe they can finish and sell without having done it. So the exit plan on a first deal has to be more evidenced, more conservative and lined up earlier than an experienced sponsor would need.
Two routes exist, and they are often combined. The first is a sale: the finished units are marketed and the proceeds clear the development finance, with local comparable sales making the gross development value credible. A refinance onto a term facility is the second route, under which the developer keeps the scheme and lets it. Our guide on exit routes at /learn/exit-strategies-for-property-developers/ walks both, and the wider picture sits on our pillar page at /solutions/development-exit-loans/.
Development exit finance is short-dated secured borrowing raised at or close to practical completion, redeeming the development finance once a scheme is built but not yet sold, priced in the region of 0.65 to 0.95 percent a month across a 6 to 18 month term. With the build risk gone, this bridge tends to cost less than the development loan being replaced, and it gives a first-time developer a calmer window in which to sell or refinance. Arranging the bridge early, ahead of the development facility maturing, takes away the pressure of a maturing loan and a rushed sale. The figures here are indicative rather than an offer of finance.
How we position a first-time application with lenders
The practical work of funding your first development project is telling the credibility story so a lender can say yes, and placing it with a funder whose appetite fits a first-timer rather than one geared to large repeat clients. Specialist development finance lenders, challenger banks, bridging lenders and private debt funds are usually far more comfortable with a first deal than a high street bank, and knowing which sits where saves weeks of knocking on the wrong doors.
We assess the scheme and the appraisal, assemble the experience proxies into a clear case, structure the SPV and the guarantees, and present the exit as an evidenced plan. Most often we are also brought in at the end, to arrange the development exit finance that clears a maturing development loan and creates room for the sales to complete. As a broker and introducer we do not lend; the lending we place is unregulated commercial debt, and any figure we cite is illustrative rather than an offer of finance.
Funding your first development project: what lenders will and will not accept: common questions
Is funding a first development project genuinely harder than funding later schemes?
It is different rather than simply harder. The same development finance lenders will back a first project, but they adjust the terms for the missing track record by holding leverage nearer 65 to 70 percent of gross development value, pricing at the firmer end of the range and asking for a tighter structure. Once you have completed schemes those development finance terms ease, which is why the first project is the one to build conservatively. These are illustrative bands and not an offer of finance.
How can I show lenders relevant experience if I have never completed a development?
Lenders accept proxies that answer the delivery question in place of completed schemes. The strongest are an experienced main contractor on a fixed-price contract, a joint venture with an experienced partner, a relevant trade or construction background, and a history of completed refurbishments or conversions. One or two strong proxies, most often a capable contractor paired with a relevant background, is usually enough to make a first project fundable at sensible leverage.
What kind of first scheme do lenders prefer to fund?
Lenders back first-timers most readily on schemes that are small, simple and free of planning risk. That means a handful of units rather than a large multi-phase site, a straightforward new build or light conversion rather than a complex structure, and a site bought with detailed or full planning permission already in place. A healthy profit margin and proven local demand for the finished units complete the picture.
How much less can a first-time developer borrow than an experienced sponsor?
On the same scheme a first-timer is typically held a few percentage points lower on leverage. Where an experienced sponsor might reach a loan to gross development value of 70 to 75 percent and a loan to cost near 90 percent, a first development project is more often capped around 65 to 70 percent of value and 80 to 85 percent of cost. The difference is funded as additional equity. The figures here are indicative rather than an offer of finance.
Is there a first time property developer finance calculator I can use?
You can model a scheme before you speak to a lender using our development exit loan calculator at /tools/development-exit-loan-calculator/, which sizes an indicative facility against gross development value. It gives a first-time developer a realistic sense of the equity gap and the exit figure, though the output is indicative only, not an offer of finance. The funder settles the actual terms once the scheme is assessed.
Why do lenders scrutinise the exit more closely on a first deal?
The exit is how the loan is repaid, and it is the point at which a first-time developer is least tested, because they have not sold or refinanced a completed scheme before. Lenders therefore want the exit plan more evidenced and lined up earlier: a sale supported by local comparable values, or a refinance onto a term loan. Arranging the development exit finance before the development facility matures removes the pressure of a rushed sale.
Can a relevant trade or a completed refurbishment count as a track record?
Yes, both are genuine experience proxies. Time as a builder, main contractor, site manager or surveyor is transferable experience a lender will weigh, and a history of completed buy-to-let refurbishments or conversions shows you can run a project, manage a budget and handle contractors. Neither fully replaces a completed ground-up scheme, but paired with an experienced main contractor they make a first development project fundable.
Should I line up my exit bridge before I start building?
It is worth planning the exit before the development finance is even drawn and arranging the bridging well before the development facility matures. Development exit finance is bridging that replaces the development loan at or near practical completion, priced in the region of 0.65 to 0.95 percent a month over a 6 to 18 month period, and is usually cheaper because the build risk has gone. Lining it up early gives a first-time developer a calm window to sell or refinance rather than a scramble against a maturing loan.
Put this guide to work
Describe your scheme, the balance outstanding and the redemption date. Inside one working day you will know whether it funds and on roughly what terms.