Bank finance isn’t wrong for real estate projects; it’s often the cheapest capital available. The problem is timing. Construction doesn’t pause while a sanction moves through committee review.
Why Bank Finance Timelines Don’t Match Construction Timelines
- Detailed project appraisals required before any sanction
- Extensive documentation cycles, often standardised regardless of project urgency
- Multi-level internal approvals within the bank
- Sanction timelines of six to ten weeks are not unusual, even for developers with strong track records
- Disbursal after sanction can add further delay, especially for tranche-linked releases
The Real Cost of Waiting on a Bank Sanction
- Labour and material costs continue accruing while the sanction is in process
- Buyer confidence can erode if visible progress stalls during the wait
- RERA timeline exposure keeps accumulating regardless of why funds are delayed
- The “cheaper” capital isn’t actually cheaper if the delay in securing it costs more than the interest saved
What Alternative/Structured Finance Looks Like Instead
- Underwritten against the project itself, approvals, progress, and receivables rather than requiring the same documentation cycle as a bank
- Faster turnaround, often days to a few weeks rather than months
- More flexible tranche structuring, matched to actual site needs
- Willingness to fund stages banks are often reluctant to touch, such as pre-RERA or last-mile completion
- Pricing reflects the speed and flexibility offered, typically higher than bank rates
Bank Finance vs. Alternative Finance: A Quick Comparison
Turnaround time
- Bank: typically weeks to months
- Alternative: typically days to a few weeks
Documentation
- Bank: extensive, standardised
- Alternative: streamlined, project-specific
Flexibility
- Bank: fixed structure, less room to adapt mid-project
- Alternative: structured around project stage and cash flow
Cost
- Bank: generally lower interest
- Alternative: generally higher, priced for speed and flexibility
Best suited for
- Bank: well-documented, non-urgent funding needs
- Alternative: time-sensitive gaps, approval-stage or last-mile funding
When It Makes Sense to Go Alternative vs. Stick with a Bank
- Use bank finance for the bulk of a project’s planned, non-urgent funding
- Layer in alternative or structured finance specifically for timing gaps a bank’s process can’t close fast enough
- Consider alternative finance first for pre-RERA, last-mile, or milestone-specific needs
- Reassess mid-project if a bank sanction is taking longer than the construction schedule allows
If your project has genuine deadline pressure at a milestone, a stalled site, or a sanction that’s taking longer than your schedule allows, a parallel conversation with a structured finance provider is worth having rather than waiting out the bank process alone.