A bridging loan against a single site is a contained decision. Multi-phase funding is not. Once a scheme runs into eight figures and the build is broken into plots, blocks or distinct sub-sites released one after another, the finance has to move at the same pace as the build. Get the structure wrong at the outset, and a scheme that looked entirely fundable on paper can stall between phases, with capital locked up in phase one while phase two waits on a facility that was never built to flex.
This is where experienced developers still come unstuck. They have run single-phase schemes before, know their numbers, and assume a larger, phased development is the same process at a bigger scale. It is not. Multi-phase funding brings sequencing, risk staging and lender monitoring into the deal in a way a single facility never has to deal with, and most mainstream lenders simply are not set up to underwrite it.
What actually makes a scheme multi-phase
Not every large development is genuinely phased. A £20m scheme built and sold as one continuous programme is still, from a lender’s point of view, a single facility against a single risk.
A phased scheme is different. It has natural break points, separate plots on a site, blocks within a single planning consent, or distinct sub-sites acquired and built out in sequence, where each phase can, in principle, stand or fall on its own. Sales or lettings from an earlier phase help fund or de-risk the phase that follows. That is the structural feature lenders are actually pricing: not the total size of the scheme, but the relationship between one phase and the next.
Getting this right matters, because it changes what the lender needs to see. A single-phase appraisal has to prove one build and one exit. A multi-phase appraisal has to prove a sequence, and show that each link in that sequence is credible on its own terms.
Structuring the facility around the sequence
There are broadly two ways a multi-phase scheme gets funded, and the choice shapes everything that follows.
One facility across the whole scheme
A single lender takes the full programme, drawing down against each phase in turn under one set of terms. This suits developers with a strong track record and a lender that already trusts the sponsor, because it removes the friction of re-underwriting at every phase and can bring down the overall cost of finance.
Phase-by-phase facilities
Each phase is financed separately, sometimes with different lenders, often refinancing earlier phases as they complete to release equity into the next. This gives more flexibility if appetite, rates or a developer’s own priorities change over a two or three-year programme, but it means returning to underwriting repeatedly, and cross-phase security has to be handled carefully so an early lender is not left exposed once later phases are released.
Cross-collateralisation sits underneath both models. Many lenders on larger schemes want security across more than one phase, particularly early on, before there is sales or letting evidence to point to. As the programme de-risks, phase by phase, that security position typically loosens. It is one of the negotiating points worth agreeing at the outset, not discovering halfway through.
Drawdowns: paying for work that is actually done
On a phased scheme, money does not arrive as one lump sum. It is released in tranches, tied to a monitoring surveyor’s certification of works completed, and the mechanics of that release are where a lot of cash flow pressure actually bites.
A typical structure sees an initial drawdown to acquire the phase or serviced plot, followed by monthly or stage-based tranches against certified build cost as construction progresses. The monitoring surveyor, appointed by the lender, inspects and confirms progress before each release is authorised. Retentions are common, a percentage of each tranche held back until practical completion, protecting the lender against defects or a contractor who does not finish the job.
The point that catches developers out is the lag. Certification, sign-off and release rarely happen in the same week as the works themselves. A scheme with a tight contractor payment cycle and a slower drawdown cycle can find itself funding the gap out of its own working capital, phase after phase, unless that timing mismatch is planned for from the start.
Risk staging: why phase two is not automatically funded
On a genuinely phased scheme, a lender rarely commits fully to every phase at outset. Later phases are typically subject to conditions, sometimes called gateways or hurdles, that have to be met before funding releases.
Common conditions include:
- A minimum level of sales, reservations or pre-lets achieved on the phase ahead of it
- Actual build costs on the completed phase tracking within an agreed tolerance of the appraisal
- No material change to planning, valuation or the wider market since the facility was agreed
This is not a lender being difficult. It reflects a straightforward reality: performance on phase one is the best evidence a lender has of how phase two is likely to go. A developer who sells strongly and builds to budget on phase one earns better terms and smoother releases into phase two. A phase that underperforms, on sales or on cost, will slow the whole sequence while the lender reassesses.
Building this into the appraisal from day one, with realistic hurdle rates rather than the figures a developer hopes to hit, is one of the clearest differences between a scheme that keeps moving and one that stalls at the gateway.
Lender monitoring across the life of the programme
Monitoring on a multi-phase scheme runs for longer and covers more ground than on a single site. Alongside the physical inspections behind each drawdown, expect regular cost-to-complete reports, updated cash flow forecasts, and reviews of sales or letting progress on completed and part-completed phases.
Facility agreements on larger, phased schemes typically include covenants: minimum sales rates, loan-to-GDV thresholds that must hold as the scheme progresses, and reporting deadlines. Breaching a covenant does not automatically mean a default, but it does trigger a conversation, and it is far better to flag a slipping sales rate or a cost overrun early than to let a lender discover it at the next scheduled review.
This on-going scrutiny is the trade-off for the leverage a phased structure allows. Lenders are prepared to fund a multi-year programme in stages precisely because they can keep checking the story still holds at each stage.
Where the structuring most often goes wrong
A handful of mistakes turn up repeatedly on phased schemes.
A facility that cannot flex
Locking in a rigid drawdown schedule against a build programme that always shifts, even slightly, leaves no room when phase one runs four weeks late or sells more slowly than forecast.
No headroom for cost inflation between phases
Material and labour costs move over a two or three-year programme. An appraisal that assumes flat costs across every phase is an appraisal built to be wrong.
Treating each phase as an entirely separate financing event
This misses the opportunity to negotiate better terms into later phases on the strength of proven performance in earlier ones, and can mean re-proving the whole scheme from scratch each time.
An exit window that does not account for the tail
Selling or letting the final phase almost always takes longer than the first, once the initial wave of demand has been absorbed. Facilities that assume a uniform sales rate across every phase tend to run short at the end, not the beginning.
Structuring the whole programme, not just the next drawdown
A multi-phase scheme is, in effect, several financing decisions that have to work as one continuous plan. That takes a different kind of packaging to a single bridging loan: an appraisal that stands up phase by phase, a facility structure matched to how the sponsor actually wants to release equity between phases, and a lender who is comfortable underwriting a sequence rather than a single event.
We arrange development finance for schemes across the UK, from single-site refurbishments through to phased programmes well into eight figures, drawing on a panel of 400+ lenders to find one comfortable with the way a particular scheme is actually going to be built and sold. If you have a multi-phase scheme in mind and want a straight view on how it could be structured, get in touch.
Call us on 0207 965 7261 or email hello@tigerfinancial.co.uk.