An infrastructure loan provides funding for pre-construction work required to make a development site ready for building. This includes access roads, utility connections, site clearance, groundworks, or remediation. Often the first form of external finance drawn, infrastructure loans help unlock development value and are typically secured as a senior debt facility with a first legal charge. In UK property development finance, this loan type plays a crucial role where upfront enabling costs are significant and time-sensitive, and where phased drawdowns or layered funding strategies are being used to de-risk later stages of development.
Within the capital structure, an infrastructure loan typically sits at the Senior Debt 1st Charge level, giving the lender priority over the site during early-stage works when risk is highest and value is still being established. Given its front-loaded nature, lenders often rely on protective provisions such as Step-In Rights to maintain control if delivery issues arise. Close scrutiny is also applied to Contractor/Delivery Risk, as delays or cost overruns at this stage can materially impact the viability of subsequent funding tranches and the overall development programme.
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