For budding real estate developers in Nigeria, access to funds is always a challenge. While many have tried the route of seeking off-takers for their off-plan projects, the reality of the market is that a developer who goes through thatpath must also have some funds to kick start a project if off-takers where to show any serious commitment. A top real estate developer once told me that he always ensures he has 80% of the funds to complete a project before launching out and looking for off-takers. “It is safer to be safe in real estate”, he says. For developers looking for loans to kick start their projects, this article will tell you what you should know and subsequently do to access an estate developer’s loan in Nigeria.
There is no gainsaying that the cost of land in Nigeria is unusually high especially in cities like Lagos, Port Harcourt, Abuja and Enugu. How about the problem of accessing funds for estate developers which is a must for most if not all estate developers? Developing an estate is not child’s play, there’s a lot that goes into it. However, if a developer can have access to funds, he may be on his way to solving a myriad of problems. You know that saying about money making the world go round right? Albeit, some estate developers don’t even know the processes involved in accessing these funds; they are unaware of what it takes to access an estate developer’s loan in Nigeria for their estate development project
Here is a checklist of what you should do to access an estate developer’s loan in Nigeria. The first is an application form with 2 passport photographs of the signatories to the credit and also an application letter addressed to the Managing Director of the Bank/Mortgage Bank granting the loan.
The others are: Certificate of Incorporation, Photocopy of article and memorandum of association of the company with certified true copy of form C02 and CO7, Detailed brochure and profile of the company including:List of Board of Directors( Names, Position and Profession in tabular form), List of shareholding profile of the Board of Directors and others, List of Management staff including rank, designation, profession, qualification and years of experience, Technical team if different from management staff, List of project executed by the developer indicating location, name of Estate, house type, number of housing units and cost, Audited annual accounts with signature, seal and certification stamp of the auditors for the previous three years, Photocopy of the tax clearance certificate for three years, Approved building and layout plan, Financial plan and budget including financial projections, Copy of title document and Deed of Assignment.
It will also include: Equity contribution, Proposed collateral security, The company’s board of Directors resolution to borrow signed by the chairman and company’s secretary, Valuation report signed by a registered estate surveyor on the proposed project, appointed and approved by the Mortgage bank, Priced Bill of Quantities (BOQ)/Bill of completion signed by a registered quantity surveyor, Feasibility and viability development report, Cash flow projection stating the proposed periodic repayment, Project work program/plan in addition to fund release plan, Marketing plan and a List of intending buyers.
Any other relevant information that may facilitate quick consideration of the estate developer’s loan would be welcomed.These are a few of the criteria and lending guidelines a typical mortgage bank in Nigeria would look into before granting loan to an estate developer. The bottom line is that the overall business and financial risk of your business is put into consideration when evaluating your loan application.