Developer took cash out from one project to get moving on the next, using an Equity Line of Credit through DFP.
A lack of cash for any business creates all sorts of unnecessary risks in terms of working capital and restricting growth.
If you have new or existing developments or are in the process of reviewing terms, we can help you maximise your borrowings and structure your equity to use for your next project or negotiate better terms.
- Start your next project partway through your current one
- Even out cash flow
- Fund the gap between your first mortgage and total development costs
- Refinance and negotiate better terms
Project Background
The developer had a 35 architecturally-designed apartment project under construction and another project in final pre-construction stage. They wanted to grow their project pipeline and seek other opportunities.
The Solution
Having worked with DFP before, the developer explained the situation to us and the purpose of finance.
Based on the equity in each project, DFP arranged finance of $1.5 million+ within a matter of days, providing the developer with cash/working capital they could use as the business required to move forward on the next opportunity.
The Results
The developer pursued other opportunities with funds available for land settlement and construction costs, expanding their project pipeline. It also allowed them to use it as working capital as they saw fit for their business needs.
In the property developer's words:
"Essentially it saw a substantial amount of cash released to us that we could use as working capital, to progress on our next projects, or to use as we see is best for our company. It also lowered our ongoing interest expense considerably.
Having this cash in hand has strengthened us further as a property development business because it allowed us to pursue additional projects. Without the ‘line of credit' we would have been very restricted in what other opportunities we could pursue while waiting for our existing projects to complete.
This option is attractive for a property development business because traditional lenders are very reluctant to release cash directly to a borrower. Traditional lenders prefer to release funding in payment of an expense, but not as working capital where the borrower can use the cash freely.
As a development business, however, it is critical that we have the cash liquidity to operate and pursue new opportunities. It is also very inefficient as a business to have equity tied up doing nothing when there are ways we could be using that cash to further grow our company and our project pipeline. This loan product is absolutely something I plan to continue to use over time as I lead our business towards our goals. "
Find out how to make your project and equity work harder for you, request a no-obligation call with our finance experts.