If you're looking for financing for your construction project, lenders and investors will want to know that their money is going toward a project that will pay off. They don't want to take risks unless they really like the idea and think it can overcome the odds. But as the project coordinator or creator, you need to be very clear about how your project will handle issues and reduce risk as much as possible.
How Does the Market for the Project Look?
If you're trying to get financing for a residential construction project, for example, you'll need to show that the market for that type of housing is strong enough to provide returns. Obviously, you can't predict everything. But you can spot warning signs and track trends, as well as look back at similar trends in history. Knowing that the market is more likely to remain strong will help.
How Much Does This Financing Request Exceed What They've Seen?
Your budget may be well-researched and totally appropriate for what you've proposed, but if the total amount greatly exceeds what lenders and investors have seen for similar projects, they may consider your project a big risk. You'll need to show how paying back the financing will not be any more difficult than it would be for less costly projects. A large part of getting that financing will depend on your ability to show how the perceived risks are more like perceptions, even if the risks are very real.
How Much Does the Project Plan Account for Problems?
It's very common for project plans and proposals to describe how the project is supposed to go and to describe the budget the ideal project will need. But investors and lenders want to know that you've thought about cost overruns, supply chain disruption, strikes, material shortages, and more. All of these can really throw your project out of whack, leading to poorer quality, missed deadlines, and the risk that repayment of any financing would be delayed. When you develop your project proposal, address potential issues such as these and show how you could work around them.
Project financing is not always hard to get, but you will need to be very, very prepared and have a complete proposal that addresses potential problems before you can even think about getting funded. It may help to meet with a project finance risk consultant to go over the risks you face so you can address them before investors do.