Construction & Project Finance

Facility size	₹20–150 crore
Typical funding	60–70% of construction cost
Lenders	Banks, NBFCs, AIF Category II debt funds, private credit
Indicative pricing	10–20%+ p.a. depending on lender and project stage
Security	Project land and receivables, typically
Disbursement	Stage-wise, against construction progress
Timeline	2–10 days for clean mandates; longer for complex structures

What construction finance can fund

Project debt is not one product. The same developer often needs different money at different stages, and each stage has a different lender pool behind it.

• Land acquisition. Funding to buy or aggregate land ahead of approvals. Largely an NBFC, AIF and private credit market — banks generally stay out.
• Construction and development finance. The core facility, drawn down in tranches as the project is built and verified.
• Last-mile and completion funding. For projects that have stalled with inventory already sold and buyers waiting. Priced for risk, structured around a completion budget.
• Lease rental discounting on completed leased assets. Once a commercial asset is built and leased, the rent itself becomes cheap collateral. See lease rental discounting.
• Refinancing existing project debt. Moving a facility to better pricing or a longer tenor, consolidating multiple lenders, or releasing surplus value created since the original sanction.

Who lends to projects — and what each one wants

Three pools fund Indian real estate, and they want different things. Approaching the wrong one wastes weeks and leaves a trail of declines on your file. The honest version:

Banks

Cheapest money, indicatively 10–13% as of July 2026, and the hardest to get. Banks want RERA registration, sanctioned plans, clean title, an established developer with delivered projects, and usually some sales already on the books. They rarely fund raw land, and they are the slowest to move. If your project fits a bank, take the bank.

NBFCs

Indicatively 13–17%. NBFCs go earlier in the project cycle, tolerate partial approvals, and decide faster. They price for the risk they take and often want tighter escrow control over collections. For most mid-sized developers this is the practical middle: real speed, real flexibility, a few hundred basis points of cost.

AIF debt funds and private credit

Indicatively 15–20% and above. These are the lenders for land funding, last-mile completion, stressed projects, and anything with a story. Structures are bespoke — defined exits, milestone covenants, sometimes an equity-like kicker. Expensive on paper, but the comparison is not against bank debt; it is against a project that stays frozen.

The gap between these pools is where most developer distress lives — projects past land and approvals but short of completion, where banks have stepped back and specialist funds have stepped in. Knowing which pool actually funds your stage is most of the job.

What lenders look at

Every project lender in India assesses roughly the same six things, in roughly this order. Get these straight before anyone sees the file.

• Approvals. RERA registration, sanctioned plans, environmental and local body clearances, and what is still pending.
• Promoter track record. Projects delivered, on time and to spec — ideally in the same micro-market.
• Sales velocity and collections. How fast inventory moves, and how reliably buyers actually pay.
• Project cash-flow model. A month-by-month view of collections, construction spend, and debt service.
• Title and encumbrance status. Clean chain of title, existing charges, and any litigation on the land.
• Cost-to-completion versus funds available. What it takes to finish, against what is already in hand from equity, sales, and existing debt.

Documents you'll need

Nothing exotic, but completeness is what decides speed. A file that arrives whole gets a term sheet in days; a file that arrives in pieces takes months and invites a decline.

• Audited financials, last three years
• Current-year provisional financials
• Income tax returns, last three years
• GST returns, last twelve months
• Bank statements, last twelve months
• Existing sanction letters and repayment track record
• Project approvals and RERA registration
• Sanctioned plan and detailed cost estimate
• Title documents and legal search report
• Sales and collection statement for the project
• KYC of the company and the promoters
• Promoter net-worth statement

How the process works

Five steps, run in parallel wherever possible. The whole design of the process is to avoid shopping your file from one lender to the next.

1. We understand the project. What is built, what is approved, what is sold, what is owed, and what the money is for. Half an hour is usually enough to say what is raisable, from which pool, at what realistic pricing.
2. We build the file. Financials, cash-flow model, approvals, and title assembled into one clean package. This single step decides most of your timeline.
3. We approach the right lenders in parallel. Three to five institutions matched to your project stage, at the same time rather than one after another. That competition is what moves terms.
4. We compare indicative term sheets. Rate is only part of the cost. Tenor, drawdown schedule, security, escrow terms, prepayment charges, and covenants decide what the facility is actually worth to you.
5. Diligence, sanction, documentation, disbursement. Legal and technical diligence, valuation, credit approval, then documentation and stage-wise release. We run it through to money in the account.

Common questions

Builder ko construction loan kaise milta hai?

Lender teen cheezein dekhta hai: project ke approvals (RERA registration aur sanctioned plan), promoter ka delivery track record, aur project ki sales aur collections. Bank sabse sasta hai par slow, aur zyadatar established developers ko deta hai. NBFC tez hai. AIF aur private credit wahan kaam aate hain jahan bank mana kar de — land funding, last-mile, ya ruka hua project. Loan construction cost ka 60–70% tak hota hai, aur stage-wise release hota hai.

Can I get funding for a stalled project?

Yes. Stalled and last-mile projects are funded mainly by AIF debt funds and private credit rather than banks. Lenders will want clear title, updated approvals, a realistic cost-to-completion budget, and visibility on receivables from inventory already sold. Pricing is higher than bank debt and the structure usually carries a defined exit. The trade is straightforward: a frozen asset becomes a finished, saleable one.

How much of the project cost can be funded?

As an indicative range, 60–70% of construction cost, with promoter equity and customer collections covering the rest. The exact number depends on approvals, sales velocity, the land value already in the project, and existing debt. Money is released stage-wise against verified construction progress, not upfront. Lenders size the facility off cost-to-completion, so a partly built project draws less than a greenfield one.

Can land purchase be funded?

Yes, though rarely by banks. Land funding is largely an NBFC, AIF debt fund, and private credit market, priced accordingly — indicatively 15–20% and above as of July 2026. Lenders look for clear title, a defined development plan and approval path, and a credible exit, whether that is a construction facility later, project sales, or a joint development. Loan-to-value against raw land is conservative.

More answers on large-ticket borrowing are in the FAQ. If a bank has already declined the project, the realistic routes are set out in alternatives after a bank rejection. Where the security is a completed asset rather than a project, compare loan against property.

Pacewell Capital is a debt advisory and arranger, not a lender. All loans and facilities described here are provided by RBI-regulated banks, NBFCs, and funds, subject to their own credit approval, diligence, and documentation. Interest rates, loan-to-value ratios, and timelines stated on this page are indicative market ranges as of July 2026 and are not offers or commitments.