A development can show a forecast profit and still have a funding shortfall. The difference is between the project’s expected outcome and the money available to pay for it.
The Basic Finance development feasibility calculator separates these questions. It estimates project costs and residual land value, then applies the selected debt limits to estimate a cash equity requirement. Its inputs are assumptions, not lender-approved figures.
Two limits, not one
Loan-to-GRV compares debt with the accepted forecast value of the completed project. Loan-to-cost compares debt with the relevant cost base. In the calculator, indicative senior debt is constrained by whichever selected limit produces the lower amount.
A percentage of future value is therefore not a promise that the same percentage of every project cost will be funded. For the broader assessment framework, see our property development finance guide.
A simplified hypothetical example
This example illustrates the arithmetic only. It is not a client case, lender quote or reproduction of the calculator’s full residual-land-value model. Assume the following cost figure has already been established for this simplified calculation:
| Assumption | Amount |
|---|---|
| Forecast completed value | $10,000,000 |
| Assumed project cost base | $8,000,000 |
| Selected loan-to-GRV limit | 70% |
| Selected loan-to-cost limit | 70% |
| Available borrower cash | $1,800,000 |
The GRV-based limit gives $7 million. The cost-based limit gives $5.6 million. Applying the lower limit leaves $2.4 million of the assumed costs to be funded from other sources.
With $1.8 million of available cash and no other funding included, the illustrated gap is $600,000.
The two selected percentages are identical, but their dollar results are not. Changing the GRV assumption alone would not remove a binding cost-based limit. Actual lender treatment of costs, existing debt, security and available equity needs separate assessment.
What the result does not establish
An equity-gap result does not establish that additional debt is available, that the site is worth the modelled residual value, or that every cost has been included. The calculator’s simplified finance estimate excludes fees. Its output is not a substitute for a detailed feasibility, valuation or lender review.
Do not increase value assumptions or reduce contingency merely to make the displayed gap disappear. Instead, check the evidence supporting the inputs and identify costs or timing requirements that the simple model does not capture.
If the lender’s accepted value is below your feasibility assumption, see our development finance valuation-shortfall guide for the next evidence and funding checks.
Check timing as well as totals
An aggregate funding calculation does not show when each payment falls due or when funds become available. Prepare a cash-flow schedule alongside the feasibility. Australia’s business loan preparation guide recommends understanding cash flow, debts and borrowing requirements before applying.
Bring the site details, approval status, cost report, existing debt, available equity, delivery program and repayment plan to a funding discussion. Mark estimates clearly and distinguish them from verified figures.
Already partway through construction?
Use a current debt and cost-to-complete assessment rather than treating a whole-project calculator as a completion funding model. Our separate cost-to-complete funding-gap guide addresses that situation.
Turn assumptions into an assessment file
Run your assumptions through the calculator, then contact Basic Finance to discuss the project evidence and funding requirement.
General information for business-purpose projects only. This example is not financial, legal or tax advice, a valuation, approval or offer. Finance remains subject to assessment, due diligence and formal approval. Obtain independent advice appropriate to the project.