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Loan finance

Finance and risk

This is a good moment to consider how you will deal with finance and the associated risk. You will need to consider:

  • No bank is likely to offer 100% financing of either the site purchase or the development. Where will the remainder of the money come ¬†from? If members put up their spare capital, will you pay interest? How and at what rate? Or will you discount their house prices? By how much?
  • Although you may have formed a limited liability company, banks will want to be sure they get their money back if there is a problem and will want personal guarantees, possibly from all directors. How do members of the group feel about this?
  • The bank will also want security for its loan. This may mean that members have to contribute towards the assets. Again have you thought about the implications for this?¬†