Glossary definition
Borrower Covenant
The financial strength, track record, and creditworthiness of the borrower as assessed by the lender during underwriting. A strong borrower covenant — evidenced by a proven development track record, healthy personal net worth, and clean credit history — can improve terms, secure higher leverage, and widen the pool of available lenders.
Definition
The financial strength, track record, and creditworthiness of the borrower as assessed by the lender during underwriting. A strong borrower covenant — evidenced by a proven development track record, healthy personal net worth, and clean credit history — can improve terms, secure higher leverage, and widen the pool of available lenders. Weaker covenants may require additional security such as personal guarantees or cross-charges over other assets.
See also
Closely related terms.
Personal Guarantee (PG)
A legally binding commitment from an individual, usually the developer or company director, to personally repay some or all of a loan if the borrowing entity defaults.
Facility Agreement
The legal contract between a borrower and a lender that sets out all terms and conditions of the loan including the facility amount, interest rate, drawdown mechanics, repayment terms, covenants, and events of default.
Non-Recourse Loan
A loan where the lender's sole remedy in the event of default is to enforce against the secured property, with no additional claim against the borrower's other assets or personal wealth.
Special Purpose Vehicle (SPV)
A limited company set up specifically to hold a single property development project, ring-fencing it from the developer's other business activities and assets.
Further reading
Guides that touch this term.
Guide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readReadGuide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readRead
Where it shows up
Finance products using this term.
Service
Development Finance
Senior debt funding for ground-up residential and commercial developments.
From 6.5% p.a. · Up to 65-70% LTGDVReadService
Bridging Loans
Short-term finance for acquisitions, auction purchases and time-sensitive deals.
From 0.55% p.m. · Up to 75% LTVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVRead
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