Alternatives to bank finance
Development finance in Spain without bank presales
A bank may delay construction drawdowns until a presale condition is met even when the permit and demand are credible. Alternative finance can cover that period, but the structure must remain viable if sales take longer than planned.
Quick answer
A Spanish project without bank-level presales can still be financeable if the permit, product, pricing, sponsor equity, completion budget and downside capacity are strong. The alternative lender will replace some of the comfort provided by presales with lower leverage, more capital, tighter controls or additional security.
Before deciding
The questions that change the answer
Is the shortage of presales a timing issue or evidence of product and pricing risk?
How binding are reservations or contracts, and how much cash has been paid?
Can construction continue if sales are delayed beyond the base case?
What exact works and sales milestones permit a later bank refinance?
Why presales matter
Presales evidence demand and future repayment. Their quality depends on enforceability, deposits paid, buyer profile, cancellation rights and the legal safeguards applying to residential advance payments in Spain.
Structures to examine
Options include a full alternative development facility, a bridge until bank conditions are met, or senior debt combined with preferred equity. The refinance balance and bank entry conditions should be modelled at the outset.
Evidence the commercial case
Comparable evidence, enquiries, reservations, pricing, buyer profile and absorption scenarios help distinguish a timing gap from a weak product or price problem.
Prove demand without overstating it
Review enquiries, visits, reservation conversion, comparable sales, absorption, discounts and buyer profile. A refundable reservation is weaker evidence than a binding contract with a material deposit and a buyer able to complete.
Build a bridge to bank finance
Calculate the alternative facility balance, exit costs and the conditions a bank must actually approve. Allow time for valuation, credit and documentation after the sales milestone is reached.
Compare before deciding
Evidence of demand is not all equal
Count the legal and financial quality of each customer commitment, not only the number of reserved units.
| Evidence | What it shows | What still needs checking |
|---|---|---|
| Enquiries and visits | Top-of-funnel interest | Source, conversion and repeat contacts |
| Refundable reservation | Early buyer intent | Refund rights, amount paid and buyer quality |
| Binding private contract | Stronger commitment | Conditions, deposit, safeguards and enforceability |
| Comparable sales | Market price and absorption context | True comparability, date and incentives |
| Independent market study | Demand, supply and pricing assessment | Assumptions and consistency with the project |
Process
Build a financeable case before bank presale thresholds
The interim facility and expected bank refinance should be modelled as one continuous capital plan.
- STEP 01
Define the exact need
Set out what the money pays for, the amount required on each date, the critical milestones and the fallback if the main plan is delayed.
Output: Funding need and critical-path map
- STEP 02
Reconcile the evidence
Match the financial model to title, permits, valuation, contracts, paid invoices, debt, sales and the sponsor's proof of equity.
Output: A consistent lender information pack
- STEP 03
Design the structure
Size usable proceeds, drawdowns, maturity, repayment, security, covenants and contingency against a base case and a downside case.
Output: A financeable structure
- STEP 04
Run a selective market process
Approach only lenders or investors whose mandate fits the location, asset, stage, amount and timetable, using the same information for each.
Output: Comparable proposals
- STEP 05
Complete diligence and documents
Coordinate valuation, technical, legal, tax and KYC work, track conditions and confirm that the signed mechanics deliver the expected cash.
Output: A controlled path to closing and drawdown
Illustrative example · not an offer
A bridge to bank development finance
Illustrative timing example only; each bank and lender applies its own conditions.
Works funded before bank entry
€4.0m
Early construction and associated project costs.
Alternative facility
€3.0m
Minimum-sized interim financing, subject to its own conditions.
Sponsor cash
€1.0m
Additional equity required during the interim phase.
Expected refinance milestone
Works + sales
Documented bank requirements rather than an assumed date.
Refinance amount
Full balance + costs
Must cover drawn debt, accrued interest, fees and remaining uses.
The interim plan is viable only if the future bank facility can repay the actual balance and complete the project, with time for the bank process to take longer than expected.
Working tool
Commercial evidence and funding checklist
Use the pack to show both market demand and the project's ability to survive until that demand converts into completions.
Demand
- Unit schedule, price list and incentives
- Enquiries, visits and conversion history
- Reservations, contracts and deposits
- Comparable supply, sales and absorption
Buyer and legal
- Buyer profile and affordability where relevant
- Cancellation rights and conditions
- Advance-payment safeguards and accounts
- Sales documents reviewed by Spanish counsel
Finance
- Cash flow without assumed new sales
- Alternative lender drawdowns
- Documented bank entry conditions
- Delayed-refinance and slower-sales cases
Before signing
Red flags
They do not automatically make a transaction unfinanceable. They show where information must be reconciled, more headroom is required or the structure needs to change.
- 01
Reservations are counted as presales without reviewing deposits or refund rights.
- 02
The pricing is supported only by the sponsor's own unsold units.
- 03
The model assumes the bank refinances immediately when a sales percentage is reached.
- 04
The interim facility cannot fund the project through a delayed bank process.
- 05
The sales plan uses discounts that are absent from the revenue model.
Method and sources
The guide combines project-finance analysis with public Spanish safeguards for buyer advance payments and European credit guidance. Sales-contract and deposit treatment require Spanish legal advice.
Public source
Spanish Official Gazette · Building Act
Consolidated Spanish legislation, including safeguards and special-account requirements for advance payments on residential developments.
Public source
Banco de España · Property development loans
Official explanation of staged drawdowns, certified construction progress and interest-only periods in Spanish development lending.
Public source
European Banking Authority · Loan origination and monitoring
European guidance on feasibility, contingencies, projected sales, project timetables and monitoring of real estate lending.
Apply it to your transaction
A useful first answer starts with specific numbers and dates.
Share the location, stage, total cost, existing debt, invested equity, financing need and expected exit. We will assess fit before opening a process.
Frequently asked questions
Clear answers before you start
Can construction start without presales?
It can be financeable in selected projects. Location, product, margin, permit, sponsor equity, track record and downside capacity all matter.
Can a bank refinance the alternative loan later?
Yes, if the project later meets the bank's conditions on works, sales, equity and documentation. The expected balance and timing should leave a buffer rather than assume an immediate refinance.
Does launching sales shortly before funding solve the presale condition?
Only if sufficient, credible commitments can be produced and the timetable is compatible with lender review. A forecast is not a substitute for contracted evidence.
Does a reservation count as a presale?
Not automatically. Review whether it is binding, the amount paid, refund rights, conditions and buyer capacity. Each lender applies its own recognition rules.
When can a bank enter later?
When the project meets that bank's conditions on permit, sponsor equity, works, sales, valuation and documentation. Confirm the requirements with the bank rather than assuming a market-wide rule.
Can preferred equity solve the presale gap?
It may support the capital layer or an interim debt structure, but it does not itself prove demand. The complete project must still support the preferred return and repayment route.