Glossary definition
Working Capital
The liquid funds available to a development company to cover day-to-day operational expenses and short-term liabilities that are not covered by the project loan facility. Working capital requirements include items such as planning application fees, professional fees incurred before loan drawdown, marketing costs, and overheads.
Definition
The liquid funds available to a development company to cover day-to-day operational expenses and short-term liabilities that are not covered by the project loan facility. Working capital requirements include items such as planning application fees, professional fees incurred before loan drawdown, marketing costs, and overheads. Lenders assess the borrower's working capital position as part of the underwriting process to ensure the developer can fund costs that fall outside the facility.
See also
Closely related terms.
Equity
The developer's own capital contribution to a project, sitting at the top of the capital stack and bearing the highest risk but also receiving the residual profit.
Contingency
A budget allowance set aside for unforeseen costs during a development project, typically expressed as a percentage of build costs.
Underwriting
The process by which a lender assesses and approves a development finance application, evaluating the borrower's experience, the scheme's viability, the security offered, and the proposed exit strategy.
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
Can I Get Development Finance With No Track Record?
An eligibility guide for developers without a completed scheme. We explain which lenders will consider you, exactly what they check, and the lower leverage and higher pricing to expect.
5 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 readRead
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