Senior Debt

Senior Debt

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What is Senior Debt?

Senior Debt is a first charge development finance loan that would typically make up the majority of the funds required to complete a property development project.

It is worth noting that senior debt is the cheapest form of development finance, particularly where the borrower can provide a significant amount of cash towards the land or property purchase.

Senior Debt require borrowers to inject equity for lower risk funding, covering 65-80% of costs. While development finance streamlines funding, allowing for flexibility and direct contractor payments, with prerequisites such as a business plan, permissions, financial forecasts, and qualifications.

• Senior Debt lenders demand borrower equity to reduce lending risk
• They typically cover 65-80% of total project costs
• Borrower's equity is often expected for land purchases
• In the case of development, the bank funds construction and finance costs
• The remaining facility funds can be used for land expenses
• Development finance streamlines project funding
• It offers flexibility with 'as-needed' withdrawals and direct contractor payments

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