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You can unlock higher leverage and preserve liquidity with strategic financing. Securing development financing in British Columbia or Alberta is no longer a simple "yes or no" process. Successful developers must stage capital and use different tools at the right project phases. Two essential tools are land financing and construction draw loans.
At Brightcap Financial, we've structured hundreds of millions in financing across Western Canada—from raw land to multi-unit CMHC projects. Our experience shows that knowing when to use land versus construction draws is key to leveraging, risk management, and cash flow.
Canada’s real estate market is evolving fast. Construction costs have surged — residential builds are up 66% since 2019, and BC’s materials and labour costs grew 4% in the past year alone. Rising expenses, tighter regulations, and supply chain challenges make financing more critical than ever.
In BC, high-density areas and rezoning opportunities create multi-unit potential, but high land costs and regulatory delays can squeeze margins. Alberta offers lower land costs and strong rental demand, yet labour and material shortages still pose risks.
Strategic financing, through land loans and phased construction draws, allows developers to:
With construction inflation and market pressures continuing, developers who plan financing carefully gain a competitive edge — scaling efficiently while maximizing ROI and minimizing risk.
Land financing typically refers to short- to medium-term loans used to acquire raw or partially serviced land before construction begins. Lenders evaluate zoning approvals, future land use, borrower experience, market comparables, and projected post-development value. Developers rely on these loans to acquire parcels for future multi-family or townhouse developments, secure land for phased construction projects, or bridge the gap while preparing plans, permits, and pre-sales.
While banks tend to be cautious with raw land financing, often requiring lower loan-to-value ratios and a clear exit strategy, alternative and private lenders may provide more flexibility, allowing higher leverage or shorter-term financing that aligns with acquisition timelines.
Our company recently secured $6.6 million in land financing for a 21-unit townhouse development in Burnaby, BC, at 65% LTV with a conventional lender, demonstrating that careful structuring can maximize leverage even under conservative bank criteria.
The key takeaway here is that even amidst bank conservatism, achieving a 65% LTV is possible if there is a strong certainty in rezoning approvals and projected land use, illustrating that strategic planning and structuring are crucial for optimizing financing terms.
Construction draw financing provides capital in stages throughout the building process rather than a lump sum upfront. Developers access funds at key project milestones, such as foundation completion, framing, mechanical systems, and final finishes. This approach allows capital to align with actual cash flow needs, reduces interest costs by borrowing only when required, and ensures oversight while maintaining accountability.
Construction draw loans often include financing for soft costs, like permits, architecture, and consultants, and may incorporate interest reserves to cover loan costs during construction. Brightcap has successfully funded custom luxury homes as well as 40-unit townhouse developments using this approach, coordinating draw schedules with project timelines to preserve liquidity and maintain flexibility in response to market opportunities.
Many developers wonder whether to use land financing or construction draws first. In practice, these products complement each other and can be sequenced to stage capital efficiently. Land financing is often the initial step, especially when acquiring property before rezoning approvals or construction planning. Once pre-construction requirements are met, construction draw financing becomes the primary tool to fund the buildout.
For example, we structured a $4 million land financing deal at 55% LTV for a 40-unit townhouse project in Mission, BC, then coordinated phased construction draw financing with private lenders. This sequence minimized upfront interest costs, preserved liquidity, and allowed the developer to scale the project efficiently. Proper staging ensures developers have capital precisely when needed, without overleveraging or tying up equity unnecessarily.
Choosing the right lender is critical. Traditional banks offer lower interest rates and long-term stability, but they have strict underwriting and prefer stabilized projects. In contrast, alternative and private lenders provide faster approvals, higher leverage, flexible draw schedules, and interest-only options, making them suitable for phased or unconventional developments. Institutional or equity lenders often participate in joint ventures or mezzanine financing for high-value projects.
Our leverages access to over 100 lenders across traditional, private, and alternative channels, allowing us to engineer funding structures that match project needs, timelines, and risk tolerance. Our expertise ensures developers can combine these sources strategically for optimal outcomes.
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Every financing option carries unique considerations. Land financing exposes developers to market volatility before construction begins, potential rezoning delays, and interest-only obligations that can strain cash flow. Construction draw loans require careful scheduling to mitigate cost overruns, inspections, and lender conditions. Incorporating soft costs and interest reserves into the financing structure is critical to maintain liquidity and complete projects on time.
Typical timelines for a development include 30–60 days for land acquisition approval, 90–180 days for rezoning and permitting, and a construction draw schedule aligned with project milestones. Developers who stage capital effectively can mitigate risks while optimizing return on investment.
We approach financing as strategic capital management. We begin with a deep project assessment, analyzing zoning, pre-sales, market comparables, and developer experience. From there, we design an optimal funding structure, which may involve land financing, phased construction draws, mezzanine financing, or CMHC multi-unit products. We coordinate lenders and ensure a clear exit plan for refinancing or long-term institutional funding.
This approach allows developers to preserve liquidity, reduce interest costs, and scale projects efficiently, even in competitive or high-cost markets. A mid-rise multi-family development in Calgary exemplifies this strategy, where private land acquisition funding was followed by phased construction draws, aligning capital with project progress.
Strategically combining land financing with construction draws enables developers to reduce upfront costs, preserve equity, and respond flexibly to market conditions. This is particularly important in BC and Alberta, where land costs, regulatory timelines, and market dynamics differ significantly between regions. Staging capital effectively enhances ROI and allows developers to pursue multiple projects simultaneously while managing exposure.
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British Columbia presents high-density urban areas, rezoning opportunities, and strong demand for multi-unit projects, requiring flexible financing solutions. Alberta offers lower acquisition costs, strong rental demand, and high-yield potential. Brightcap combines local expertise with lender networks to ensure developers access capital efficiently, structure phased financing effectively, and optimize project ROI.
Developers trust us for our local expertise, access to over 100 lenders, and proven track record of funding 21- and 40-unit townhouse developments, multi-family buildings, and custom homes. Our fast approvals, strategic capital structuring, and focus on maximizing ROI while mitigating risk make us the preferred partner for developers in BC and Alberta.
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