Most financing requests are declined for a reason that has nothing to do with the merits of the transaction. They are declined because nobody could tell, from what was sent, whether the merits were there at all. A lender reading twenty files a week does not reconstruct a case from fragments. The file either answers the questions or it goes to the bottom of the pile.
What follows is the information a private lender needs before it will spend real time on a request. It is not a wish list. It is the minimum from which a credit decision can be built, and a borrower who assembles it before the first conversation typically saves three to four weeks.
One. Who is asking, and what they have done before
Not a curriculum vitae. A short, factual account of the borrower’s track record: what has been built, bought, sold or operated, over what period, and with what outcome. If there have been difficulties, they belong in the file rather than in a later discovery. Lenders in this market are not surprised by a restructuring in 2012 or a project that ran long; they are surprised by finding out about it themselves.
Where the borrower is a company, the same applies to the group behind it, and the ownership chain should be documented up to the individuals at the top. This is not curiosity. Anti money laundering obligations require the lender to identify the ultimate beneficial owner, and a chain that cannot be evidenced stops the file regardless of how good the asset is.
Two. How much, precisely
An amount, not a range. A request for “between five and ten million” tells the lender that the borrower has not finished the analysis, and it is impossible to price. If the amount genuinely depends on a variable, name the variable and give the two scenarios.
Three. What the money is for, over time
Use of funds broken down, with dates. Acquisition on completion, works drawn in stages, fees and taxes at the front, contingency held back. A single line saying “project financing” is not a use of funds. This matters because the lender is not funding a number, it is funding a sequence, and the sequence determines how the facility is drawn and what it costs.
Four. The works budget, where there is construction
For any development or refurbishment, a costed budget by chapter, prepared or reviewed by someone who signs it. Alongside it, the status of licences. A budget without licence status is unreadable, because the risk sits in the permission rather than the price of concrete. Our note on development and construction finance sets out how staged drawdown against certified progress actually works.
Five. A business plan that shows repayment
The plan does not need to be long. It needs to show a timetable, the point at which the facility is repaid, and what has to be true for that to happen. Sales at a stated price with a stated absorption rate, a refinancing at a stated loan to value, a disposal on a stated date. Then the same plan under stress: slower sales, a lower price, a delay in licensing. A borrower who has already run the downside is a different counterparty from one who has not.
A credit committee does not reward optimism. It rewards a plan whose downside has been thought about before the lender has to think about it.
Six. The security on offer
What is being pledged, and what is already pledged against it. First charge or second, over the asset itself or over the shares of the company that owns it, with or without a personal guarantee. If there are existing charges, their balances and their holders. If there are several assets, which are in and which are out.
This is the section where files most often mislead by omission. An asset described as unencumbered that carries an old embargo, an inheritance not yet formalised, or a charge that was repaid but never cancelled at the registry will be found, and the discovery costs credibility as well as time.
Seven. The registry position, current
An up to date extract from the Spanish Land Registry for every asset offered as security. Not one from two years ago, and not the deed of purchase. The extract is the document that tells the lender who owns the asset today, what charges sit on it, in what order, and whether anything is pending registration. We explain what a lender reads in it, and what commonly goes wrong, in our note on the documents that decide a Spanish deal.
What this looks like when it is done properly
A complete file is rarely more than twenty pages plus annexes. It states who is asking, how much, for what, secured on what, repaid how and when, with the documents that evidence each of those. It reads the same way to the borrower and to the lender, which is the point: a file that only makes sense when its author is in the room is a file that will be misread whenever its author is not.
Assembling that document is the part of the process where an adviser earns the fee, and it is also the part that is easiest to skip when a transaction feels urgent. Almost every borrower who skips it pays for the omission twice, once in weeks and once in terms. Where the borrower is foreign or the asset sits inside a corporate structure, the same file has to work in two legal systems at once, which is the subject of our note on cross-border financing for Spanish assets.
Montclare structures and arranges financing secured on European assets, and prepares the corporate and tax structure that sits behind it. Our services are set out on our services page.
This article is informational and does not constitute tax, legal or financial advice. Lending and credit intermediation are regulated activities and the treatment of any transaction depends on its facts. Each engagement is subject to scope and applicable regulation.