Developing a nursery, as opposed to purchasing an existing setting, is often considered to be a more attractive means of achieving expansion, as it allows the prospective owner to influence every element of the setting. However, financing such developments can be a challenging process, which places increasing importance on understanding how banks assess funding proposals of this nature.
From a lender's perspective, the key risk in development funding is the relative uncertainty around future trading performance, namely whether the new nursery will generate sufficient profits to repay any loans provided. When financing new developments, a lender does not have the luxury of being able to form a detailed view of forecast profitability based on historic financials and occupancy levels. Your application needs to provide the lender with the necessary comfort that the nursery will attract enough children to operate successfully.
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