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Construction Finance Overview
In India, the real estate sector is the second-highest employment generator, after the agriculture sector. Real estate sector in India is expected to reach US$ 1 trillion by 2030. By 2025, it will contribute 13% to country’s GDP. Emergence of nuclear families, rapid urbanisation and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial and retail. Rapid urbanisation in the country is pushing the growth of real estate. >70-75% of India’s GDP  will be contributed by urban areas by 2020. According to India Ratings and Research, the Indian real estate sector may stage a sharp  k-shaped recovery in FY22. However, the overall sales in FY22 could still be ~14% below the FY20 levels. Construction finance  required collateral. Collateral can be provided in the form of hypothecation of the project receivables or through the mortgage of the property. Loan amounts can go up to 100 Crore but loan amounts offered at the time of availing the loan will depend on evaluation of  the construction cost.Multiple financial institutions including banking and non-banking are offering loans for new construction i.e.,  construction finance under project finance. Finanza Advisory has specialized in arrangement of project finance to Builders &  Developers through banks and financial institution and provide customized services to the developers as per theirs requirement based  upon their completed projects and past experience.

Construction Finance Process

  • Project report
  • Company profile
  • Valuation & legal report
  • Evaluation report on format
  • Past & future projection
  • Credit history of the client
  • Documentation
  • Personal discussion with the client

Criteria for Construction Funding

  • An Indian Resident
  • Individuals, Self-Employed, Proprietors, Professional, Partnership Firms and Private Limited Company are eligible for Project Loan / Construction Loan
  • Minimum age of 21 years
  • Builder has good experience and delivered minimum 2 lacs square feet
  • Collateral based loan; same project will be hypothecated by bank /NBFC at the time of funding 
  • Ownership land in the name of promoter or registered development with land owners (vacate land)
  • In SRA- we can do construction finance only on saleable portion of construction cost subject to Rehab building to be handover to the society/members & CC is available till floor
  • In redevelopment project- only saleable portion of the construction cost can be financed if commencement certificate of the saleable area is available

Documenst required for Construction Funding

  • Identity proof, residence, office proof, project profile along with detail evaluation (Required in excel sheet) 
  • Legal Docs of land, Property Docs, Development Agreement, Govt Approvals etc.
  • Copy of all statutory approvals regarding project
  • Income/Cash flow to establish source of repayments
  • Income tax return of Individuals & Firm/ Company
  • Bank statement 
  • Exiting loan/ Obligation details of Individuals & Firm/ Company
  • MOA & AOA, Partnership Deed, LLP deed, GST certificate with GSTR-3B etc.