How faster access to finance helps reduce risk and support project success for SME developers

Fast access to finance can drive the success of a property project by delivering funds on time and avoiding unnecessary delays that contribute to mounting costs for developers.

It’s especially vital for small-to-medium (SME) developers, who are more vulnerable to risks in relation to market volatility, increased holding costs and missed opportunities.

Commercial brokers can greatly improve the appeal of their services if they can solve the financing pain points of developers. One way to achieve this is to team up with specialised marketplace lenders, who can provide faster and more secure financing options to SME clients.

Financial access impacts the careers of developers long-term

Daniel He, property director of CrowdProperty Australia, says the ability to rapidly access finance can make a pivotal difference to the overall success of SME developers.

From the perspective of individual projects, any financing delays will immediately have a negative effect on developers by increasing their holdings costs.

Any subsequent problems with financing will also stall the project once it’s off the ground, further compounding the eventual cost of completion.

“When developers need to wait longer to start their projects, their holding costs immediately add up,” Daniel He said.

“If financing problems arise subsequently, it stalls the project. Then you’ve got to reboot things to get the machine running again, which ultimately results in further costs and loss of momentum.”

If the same problems with financial access are encountered across numerous projects, it can result in a compounding effect that severely holds back the progress of developers over the long-term course of their careers.

“It isn’t just the costs of one project that are affected - it’s multiplied across numerous projects, which ultimately affects the number of projects the developer can complete,” He said.

“This means developers end up doing fewer projects over the same timeframe with the same amount of money invested.”

As well as reducing holding costs and increasing project volume, faster access to finance can help reduce developers’ exposure to changes in the market as a result of longer project times or missed opportunities as a result of financing delays.

The ability to rapidly access finance can also give developers a competitive advantage against peers who are held up by slower, traditional lenders.

For brokers, the ability to solve these financing pain points for SME developers across multiple projects can help secure a loyal base of repeat clients.

Quantifying the difference

As a specialised marketplace lender, CrowdProperty can considerably improve access to finance and reduce wait times for developers, thanks to the deep expertise of its veteran team.

“We’ve got a team in the UK and Australia that has around 150 years of direct project experience, doing it ourselves both in the past and at present,” Daniel He said.

This expertise means CrowdProperty can review and reach a decision on the real estate projects of developers with much greater speed and accuracy than traditional financial providers.

“We take four to eight weeks to complete a deal, with an indicative offer within the week for a project, whereas typically you’re looking at around the four to eight-month mark from the big banks,” Daniel He said.

“From a holding costs perspective for the developer, that’s essentially the difference between two to six months.”

Once the project is up and running, developers can also rest assured they will have continuous access to funds to see the project to competition.

This is because CrowdProperty uses an online fintech platform to provide them with multiple layers of financing from a diverse range of sources, running the gamut from retail investors to established institutions.

“If one source gets cut off, then we’ve got the other layers of funding that allow the financing to be there when developers need that draw down, especially when they’re mid-way through a project,“Daniel He said.

“This isn’t just from institutions, family offices and self-managed super funds, but also at the retail level, with multiple investors at different layers.”

Why the right finance partner is an asset for commercial brokers

Given the critical role funding can play in project development success, the ability to access finance rapidly can be a major advantage for brokers servicing SME developers.

Working with the right finance partner can give brokers access to financing options that match the needs of their clients and contribute to the best possible outcomes.

For this reason, Daniel He considers specialised marketplace lenders to be a tremendous asset for commercial brokers.

“Brokers are an integral part of the financing process, who serve their clients by making sure they pair up the right product for the right project,” Daniel He said.

“They serve the function of filtering out and selecting the financing deals that are best for developers.”

By providing a greater range of financing options, specialised marketplace lenders like CrowdProperty can enhance the services offered by commercial brokers, helping them to create client trust and retention.

“At CrowdProperty it’s in our best interest to make sure commercial brokers look after their clients and deliver them the best products to do so,” Daniel He said.

“With a track record of over ten years in the UK and Australia and a 3.75 “Favourable” SQM rating, brokers and their clients can enjoy the confidence of knowing that we’re there for the project.”

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