Definition
Gross facility is the total lender exposure across a specialist finance deal. It comprises the net loan advances, the arrangement fee, the exit fee, and — for rolled interest structures — the compound interest funded over the term.
Gross facility matters because it is the input used in LTGDV calculations and represents the full amount the borrower must repay at exit. Understanding gross facility is essential for accurate deal modelling: two deals with the same loan amount can have materially different gross facilities depending on rate, term, and interest treatment.
Formula
Rolled Interest
GF = Advances + Arr. Fee + Exit Fee + Compound Interest
Retained Interest
GF = Advances + Arr. Fee + Exit Fee
For retained deals, gross facility = advances + arr. fee + exit fee. The retained reserve reduces the net advance to the borrower but is not added to gross facility.
Advances plus arrangement fee, exit fee, and rolled interest equals gross facility.
Advances + Arr. Fee + Exit Fee + Rolled Interest
= Gross Facility (total lender exposure)
Worked Example — Rolled vs Retained
ROLLED — 12 months
£1,000,000 advances, 0.85% monthly rate, 12 months. Arrangement fee 2%, exit fee 1%.
Compound on advances
RETAINED — 12 months
£1,000,000 advances, 0.85% monthly rate, 12 months. Arrangement fee 2%, exit fee 1%.
Advances minus retained reserve
The retained structure produces a lower gross facility (£1,030,000 vs £1,136,906) but materially reduces the net advance (£898,000 vs £1,000,000). Both structures have total finance costs that are broadly comparable — the key difference is when and how interest is paid.
How Brokers Use Gross Facility
Gross facility is the correct input for LTGDV calculations and must be modelled before submission. Brokers who present LTGDV using net advances rather than gross facility will produce a lower leverage figure that lenders will immediately recalculate.
The difference between rolled and retained structures affects both LTGDV and the cash available to the borrower. Where a borrower needs maximum day-one cash, rolled is preferable — but the higher gross facility worsens LTGDV. Where tight LTGDV headroom is the constraint, retained may produce a lower gross facility at the cost of a reduced net advance.
How Lenders Assess Gross Facility
Lenders compute gross facility as part of their deal modelling and use it as the LTGDV numerator. They will stress it by modelling the maximum facility at term — which for rolled interest means applying the full compound interest over the maximum expected term, not the initial stated term.
Extension clauses are particularly important: if a facility may be extended by 3–6 months, the lender’s stressed gross facility includes interest for the maximum possible term. Brokers should model both base and extended-term gross facility when checking LTGDV.
Frequently Asked Questions
Why does gross facility matter for LTGDV?
LTGDV uses gross facility in the numerator, not net loan advances. Gross facility is the lender's true exposure — the full amount they must recover on exit. Using net advances would significantly understate leverage.
How does gross facility differ between rolled and retained interest?
For rolled interest: gross facility = advances + arrangement fee + exit fee + compound rolled interest. For retained interest: gross facility = advances + arrangement fee + exit fee. The retained reserve is deducted from advances, not added to the facility.
Is the repayment obligation the same as gross facility?
For retained interest, yes. For rolled interest, the repayment obligation is the exit balance (compound rolled interest plus advances) plus fees — which equals the gross facility. The key distinction is that retained interest carries a lower exit balance but reduces the net advance to borrowers.
What is a typical arrangement fee rate?
Bridging lenders typically charge 1–2% of the loan amount. Development lenders typically charge 1.5–2%. Fees vary by lender, deal size, and risk profile. They are deducted on drawdown or added to the facility.
Does gross facility affect the LTGDV calculation at draw?
Yes. Because LTGDV uses gross facility, a higher arrangement fee rate or longer term (more rolled interest) increases LTGDV even if the loan amount stays constant. This is why finance cost assumptions must be accurate in pre-submission modelling.