Have you ever been passing a construction site and looked inside? You see the large columns being erected, the huge section of earth where the foundations lay, and the massive structure that is slowly rising from the ground. Construction is amazing. It is incredible to look at what we as humans have come to build. However, one must ask the question, where does a person get the money to fund such projects? It obviously costs a large sum of money to build on a construction site. Any given project, be it a residential housing estate, a cinema, a new shopping complex, whatever it is, there is the need for money. Therefore, this article will look into this question. Hopefully, by the end, we will have a greater understanding of how the money is raised to fund these projects.
Large Financial Lenders
There are specific lenders, other than banks, that specialise in financing large construction projects. An example of this is Ascot Bridging Finance. Such companies operate in two ways; they can give the money outright before any construction has started, or, they can refinance the project at some point after construction has begun. Refinancing is when the building company runs out of money and cannot complete the project. A lender will step in, refinance, and allow the building firm to complete the development. This can be a risky business as the business that is borrowing the money can be in a position where it owes money to two separate lenders. However, all information will be made clear to the lending firm before they decide on whether to lend.
The classic way to receive funding for a project is to get in touch with a bank. A bank can provide you with a mortgage up to a certain amount. This can be a rigorous process. Due to the financial crash in 2008, banks are now stricter in how they decide to give out money. You need to be able to show a high level of security in your ability to repay the loan. In 2008, the banks were essentially handing out money for free, with low-interest rates. This is what resulted in the financial crash. Now you must show everything from your ability to repay to the security of the work site. For example, here is some information on keeping equipment safe on a construction site. This is the kind of thing that a prospective borrower would have to comply with.
Friends and Family
This is the least common of the three listed in this article. It only applies to those who have friends and family who are also in the construction game, or in some sort of business, as it is incredibly expensive to finance a project on this scale. No matter the financing, all builders are now required to comply with certain sustainability protocols. If you would like to read more on sustainability in the UK, you can do so by clicking this link.
Provided in this article are some ways in which a construction company can receive funding for a project.