A development loan — in Spain, a préstamo promotor — is the finance a bank grants to a developer to build a real estate project, secured by a mortgage over the land and the future building. It is the standard tool, but its requirements leave many viable projects short or out of reach, particularly for international and mid-sized developers. This guide explains how it works and what the options are when the bank does not cover everything.
How a Spanish development loan works
Unlike a home mortgage, the money is not released in one go. The bank approves a facility and draws it down as construction progresses, normally against certificates from the project architect and checks by a valuation company. During construction there is usually a capital grace period and interest is paid on the amount drawn. Once the works are finished, the loan is repaid from unit sales or transferred to each buyer (subrogación).
- Land tranche: in some cases the bank finances part of the land purchase, if the land is fully serviced and well valued.
- Construction tranche: drawn against works certificates until completion.
- Repayment: units are sold and the loan is repaid from proceeds, or buyers take over their share of the mortgage.
What Spanish banks typically require
Terms vary by bank and by market cycle, but the usual criteria are:
| Requirement | Typical range (indicative) |
|---|---|
| Loan-to-cost (LTC) | Roughly 60–75% of total cost; lower for developers with a short track record |
| Developer equity | About 25–40% of project cost, depending on the bank and profile |
| Pre-sales before drawdown | Often 30–50% of the units, usually under reservation or off-plan contracts |
| Security | Mortgage over land and works; frequently personal guarantees from the shareholders |
| Documentation | Building licence, project, budget, valuation, financial statements, CIRBE credit record and tax and social security certificates |
For international sponsors, banks will also look closely at the Spanish vehicle (usually an S.L.), the group structure and the origin of the equity.
The valuation matters
To qualify as mortgage lending, the valuation must be issued by an approved valuation company under Spanish rules (Orden ECO/805/2003). Reports are only valid for a limited time (generally six months for signing the loan), so it is best to commission one when the rest of the file is ready. Land without a confirmed permitted use or without a licence is valued far lower, which directly reduces what a lender will advance.
Mandatory protections for off-plan sales
If you sell off-plan, Spanish law requires you to guarantee the deposits paid by buyers (first additional provision of Law 38/1999 on Building Regulation) and, for residential, to take out the ten-year structural insurance. Banks verify both before drawdown.
When the bank loan falls short
- The equity required may exceed the developer's available liquidity, especially with several projects running in parallel.
- Pre-sale thresholds delay construction start: the bank will not draw until they are met, and reaching them before works begin is hard.
- Certain asset types — hotels, mixed-use, refurbishments or land without a licence — fit awkwardly into standard bank criteria.
In those cases, alternative finance — debt funds, platforms and private capital — complements the bank with an additional tranche at a higher cost but under different requirements. We compare both routes in bank loan vs alternative finance.
How to prepare your application
- Build the full budget: land, construction, fees, permits, marketing and taxes.
- Confirm the permitted use and the licence status with the town hall.
- Prepare a project summary with areas, specification, expected prices and timeline.
- Gather the financial information of the developer entity and its shareholders.
- Commission the valuation when the documentation is closed.
- Compare at least two funding options before signing.
Frequently asked questions
What is a Spanish development loan (préstamo promotor)?
A mortgage-backed loan that a bank grants to a developer to build a project. It is drawn in stages as construction progresses and repaid from unit sales or by buyers taking over the mortgage.
How many pre-sales do Spanish banks require?
It is common for banks to require 30–50% of the units to be sold or reserved before drawing the loan, although it varies by bank and developer.
What share of project cost does a development loan cover?
Typically 60–75% of total cost, and less for developers with a short track record. The rest must come from equity or other sources.
Can a foreign developer get a development loan in Spain?
Yes, usually through a Spanish company. Banks will examine the group structure, track record, equity origin and project in detail. Combining bank debt with alternative finance is a common way to reduce the equity needed.
The figures in this guide are indicative market ranges: they change with timing, lender and developer profile. Every transaction is assessed individually and this page is not an offer of finance.
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