Construction Finance loan
Construction Finance or Project Finance is a unique offering under which Banks/ NBFCs/ HFCs directly finances real estate developers for projects, they are developing. This product comes with customized offerings built around real estate developer’s project acquisition and construction cost basis a detailed evaluation of the project concerned.
The major project related parameters are:
- Marketability / Sale Price - The demand and saleability of the project is a vital component. Lenders often compare the price range with other available projects in the vicinity
- Tenure – it depends upon the project requirement and the availability of the cash flows
- Promoter's Contribution – either in form of equity or in land. Due weightage is given to units already sold/ committed receivables.
- Approvals – The developer has to obtain all the requisite project approvals from respective regulatory bodies from time to time.
- Monitoring Mechanism – Lenders often obtain end use certificates, progress reports and carries out financial audits and inspections periodically during tenure of loan.