It is designed to provide the necessary support when a project is close to completion but still requires additional resources to bring it to fruition.

Finish & Exit bridging finance serves as a lifeline when initial development finance has either run its course or when unexpected costs and delays have arisen, leaving the project in need of further time and funding. This type of finance is not only about providing the necessary capital but also about facilitating the developer’s intended exit plan—whether through the sale of the completed property or by refinancing with a longer-term loan.

This product is particularly useful in several circumstances. First, it is invaluable when a project’s existing development finance is nearing its expiration, and the property is not yet complete, but the time on the facility is running out. Development projects often face unforeseen delays due to various factors such as construction challenges, supply chain issues, legal hurdles, or changes in planning permissions. When these delays occur, the original finance terms may no longer be sufficient to see the project through to completion. Finish & Exit finance steps in to fill this gap, ensuring that the project can be completed without the developer facing penalties or losing control of the property.

Additionally, Finish & Exit bridging finance proves its worth when unexpected costs arise during the final stages of development. Even the most meticulously planned projects can encounter unforeseen expenses, whether due to rising material costs, additional work required by building inspectors, or changes in project scope. In such cases, this type of finance provides a swift solution, enabling developers to secure the necessary funds without interrupting the progress of their work. The improvement in the current valuation of the property, given the extensive progress on-site, makes this viable.

The challenge for the incoming lender is to become comfortable with what has transpired on the project to date prior to their involvement. They will need satisfactory answers to a number of questions, such as whether planning conditions have been satisfied, whether there are any outstanding findings in building control inspection reports, and whether a suitable building warranty will be in place upon completion.

Differences

It’s important to outline how Finish & Exit differs from development exit finance, as I’ve had to explain the distinctions to some brokers when discussing their clients’ applications.

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Development exit finance primarily focuses on the investor’s sales period, once they have substantially completed all works on-site. The financing provides time to achieve an orderly exit, which could involve a combination of sales and refinancing. At the same time, it may facilitate a capital raise that can be used to get their next project started.

In comparison, Finish & Exit typically applies to borrowers in a more problematic position, where there are still significant works remaining to achieve practical completion. They now need to replace their existing development finance with a new facility to keep the project going and reach the completed stage.

The effectiveness of Finish & Exit bridging finance can be seen in a recent completion introduced by Positive Lending. In this case, Inspired Lending provided the borrower with the funds needed to complete a pair of semi-detached new-build houses and settle outstanding bills, with the project at 1st fix stage. Despite needing to address some legal and planning obstacles, the project was successfully brought to completion thanks to the experience and proactive approach of the team involved. The Finish & Exit finance was ideal to help the client successfully navigate the final and challenging stages of their property development project.

Why the delay?

It is important for developers (and brokers) to recognise that the landscape has shifted over recent years, particularly regarding project delays. In the post-COVID environment, the once-common excuse of pandemic-related delays no longer holds the weight it used to. Lenders are now more critical and less inclined to accept COVID as a valid reason for setbacks. Developers must be prepared to provide clear, evidence-based explanations for any delays they have encountered, supported by reports from building control and warranty providers. The emphasis is now on demonstrating effective project management and a proactive approach to overcoming obstacles.

Inspired Lending is one of a small number of lenders that offer Finish & Exit finance, and it’s not just a marketing ploy for the website. We understand that all potential Finish & Exit cases are, by definition, problematic in some way, and we relish the opportunity to help developers get back on track and over the line.

In today’s market, where the margin for error is slimmer than ever, having access to a reliable Finish & Exit finance option can make all the difference between a project’s success and failure— which is why it should be in every broker’s toolkit.