Borrowers: Definition, Obligations and Creditworthiness

Rights and obligations of the borrower

Upon conclusion of the loan agreement, the borrower assumes the obligation to complete debt service – interest and repayment – as well as contractual additional obligations: order of the agreed collateral (usually a Land charge), information and reporting obligations and compliance with agreed Covenants. In return, he is entitled to the contractual disbursement of the loan funds.

What does the lenders check on the borrower?

• Creditworthiness: economic conditions, debt, payment history.
• Debt servicing capacity: Does the cash flow from property or company contribute interest and repayment sustainably?
• Track Record: Experience with comparable projects – often the most important soft criterion for property developers.
• Own resources Height and origin of the employed equity (“Skin in the Game”).

The property company and sponsor: a professional structure

Larger real estate finance is rarely completed on the private person or the operating company. Usually, a special purpose vehicle (SPV) is a borrower: It holds exactly one project that cleanly separates liability and risks. The sponsor behind it contributes equity and provides – depending on the structure – limited guarantees, such as completion or cost overrun guarantees.

How the borrower structure is set up significantly affects conditions and audit duration. We prepare requests within the framework of Financing mandates and Debt advisory In such a way that lenders can efficiently test structure, sponsor and project – an essential lever for fast, resilient decisions.