How to finance a new hall without a 20% down payment in 2025
The requirement for a 20% down payment when building a hall is often a barrier that blocks company development for years. For an investment worth 1.4 million PLN, the bank expects you to fork out 280,000 PLN from your pocket, which for many entrepreneurs means emptying the account of cash for goods. At the Carpathian Institute of Finance, we use specific mechanisms that allow you to finance an investment with only 3-5% cash involvement.
Sale-and-leaseback of machinery as your contribution
The fastest way to obtain funds for a down payment is to use the assets already working in your plant. If you own machinery bought for cash or that you've just paid off, we can conduct a sale-and-leaseback. In March 2024, we helped the owner of a carpentry shop near Nowy Targ who needed 340,000 PLN to start building a warehouse. Instead of taking a cash loan, we did a sale-and-leaseback of his two CNC machining centers from 2021.
The appraiser's valuation was 412,000 PLN, and the company received the transfer within 5 business days. This money was booked by the bank financing the hall construction as a down payment. Thanks to this, the entrepreneur didn't have to touch company savings, and the leasing installment for the machines was spread over 48 months, minimally impacting the monthly budget. We have our office on Krupówki, so we handle such operations for companies from Podhale and Lesser Poland locally, knowing the real equipment values in this industry.
Sale-and-leaseback allowed us to start construction 11 months earlier than if we had saved up from profit.
BGK guarantees and cross-collateralization
Banks are more willing to drop the 20% down payment requirement if they receive solid alternative collateral. De minimis guarantee programs allow the real cash involvement to be reduced to the level of 9.4%. In 2023, we closed 42 such transactions for production companies. Another solution is to secure the loan on another property belonging to the company or the owner. If you own a plot or a building with a regulated legal situation, the bank will treat its value as collateral for the missing contribution.
In May 2024, we finalized a loan for the construction of a hall for a transport company. Thanks to a second property mortgage, the bank financed 97.2% of the construction costs. This solution allowed the client to keep 215,000 PLN in liquid funds, which he invested in the purchase of two used tractor units. Remember that credit is a tool, not a burden – provided that the collateral structure is tailored to your specific business, and not a bank template.
Bridge financing for grants
If you plan to build a hall using EU funds, you don't have to wait for the transfer from the office to start work. Most programs work on a reimbursement basis, meaning you must first build and then you get a refund. This is where bridge credit comes in. Last quarter, one of the companies from near Rabka-Zdrój waited 6 months for a grant award decision. During this time, the costs of building materials rose by an average of 12.8%.
We calculated for them that activating bridge financing immediately was 28,400 PLN cheaper than waiting for 'free' money while steel and concrete prices rose. We activated the funds in 16 business days. The key here is precise document preparation so that the bank is certain the grant will go toward repaying the loan. Facts matter, not promises, which is why we analyze each such project based on real payment deadlines from government agencies.
Waiting for a grant while material prices inflate is the most expensive investment strategy you can choose.
Valuation with future estimated value
A little-known method is to base the down payment on the increase in real estate value during construction. Some banks accept an appraisal report performed on the future value (so-called LTV after completion of the investment). If you bought a plot at a bargain or its value has increased since the purchase, this difference can be recognized as your contribution. In July 2024, a client from Zakopane owned land bought in 2019 for 120,000 PLN. Today's valuation is 310,000 PLN.
The bank accepted this difference as a down payment, which allowed for financing 99.7% of the construction costs for the production hall itself. However, this requires cooperation with appraisers who understand the local commercial real estate market. At the Carpathian Institute of Finance, we work with 3 proven experts whose appraisals are accepted by the main investment banks in Poland. We act concretely: we check the land registry, order the valuation, and within 72 hours we know where you stand.
