Planning consultant finance for planning practices

Fee arrangements vary more in planning than in most professions, and the mix decides how easily a firm can borrow.

• Time-charged and staged fees from housebuilders, commercial developers and public bodies, invoiced monthly or at pre-application, submission and determination. These are the easiest income for a lender to rely on.
• Fixed fees for householder, change of use and smaller applications, often paid on submission.
• Success fees from landowners and land promoters, payable on a resolution to grant, on planning permission or when the land sells. They can be large, but they are contingent and may be years away.
• Recharged disbursements: the consultancy often commissions ecology, transport, flood risk, heritage and noise reports and pays the specialists before recovering the cost from the client.

Appeals stretch everything. A refused scheme going to written representations, a hearing or a public inquiry adds months of work, counsel's involvement and witness preparation, and the Planning Inspectorate's published statistics show how long decisions can take. Where the client is a landowner paying mainly on success, the consultancy carries that time itself.

• Paying sub-consultants on a large outline application before the client is billed for their reports.
• Carrying a strategic land promotion through local plan examination, where the fee depends on allocation.
• Supporting a public inquiry with a heavy time commitment over several months.
• Recruiting chartered planners, whose scarcity has pushed salaries up, to service a new framework or developer relationship.
• Bridging a slowdown when policy changes, environmental constraints such as nutrient neutrality, or a weak housing market pause applications.
• Funding a founder's retirement or a senior planner buying into the practice.

The biggest mistake is borrowing on the expectation of a success fee. Consent can be refused, a resolution to grant can stall on a section 106 agreement, and land deals can collapse after permission. If repayments only work when a contingent fee arrives, the loan is a bet on the planning outcome. Better options include negotiating part of the fee as monthly retainers on promotion work, asking clients to pay specialists directly, and charging interest on late payment where terms allow. Equity from a senior planner joining the business may suit growth better than debt.

Illustration. A consultancy bills £40,000 a month in time-charged fees and holds a success fee worth £150,000 on a strategic site awaiting a local plan decision. A lender will typically look at the £40,000 monthly base, the debtor book and the bank statements when sizing a facility, and treat the £150,000 as upside. If the firm needs £60,000 to carry an inquiry, the question is whether the monthly base can repay it if the success fee never arrives. These figures are hypothetical.

• Invoice finance: fund issued fee invoices
• Revolving credit facility: cover appeal and application WIP
• Unsecured business loans: recruitment and growth
• PII premium finance: spread the renewal
• HMRC loans: spread VAT and corporation tax
• Practice acquisition finance: buy a practice or a partner's share