How Project Financing Works in Costa Rica

Project financing in Costa Rica can mean different things. For a property owner or developer, it often means finding short-term capital secured by suitable real estate to complete, improve, reposition, or move forward with a defined project.

GAP coordinates qualified property-backed financing requests with private lenders. This is not the same as a long-term bank construction mortgage, unsecured business loan, or pooled investment fund. The property, title, realistic value, requested amount, payment plan, and principal-repayment plan all need to work together.

GAP reviews requests starting at US$50,000. GAP does not require or pull a credit score for a normal property-backed request and uses first-lien property security only.

• Requests starting at US$50,000
• Short-term terms generally ranging from 6 months to 3 years
• First-lien property security only
• No Costa Rica credit score required or pulled for a normal request
• Qualified borrowers of any nationality may be reviewed
• Qualified loans can often close in about 2 weeks after a complete file and due diligence

Every request is reviewed individually. Providing information does not create an approval, funding commitment, rate, loan amount, term, or closing date.

What Does Project Financing Mean in Costa Rica?

In large international transactions, project finance can refer to a specialized structure where lenders depend mainly on a project’s future cash flow. That is not how most private property-backed loan requests are structured here.

For many Costa Rica development or business-property requests, the lender is primarily reviewing the real estate security and the borrower’s full repayment plan. The project may be part of that plan, but the lender also needs to understand what property secures the loan, whether clear first-lien security is available, and how the principal balance will be repaid at maturity.

A project may involve finishing a home, improving a rental property, completing infrastructure, preparing a property for sale, building a small commercial operation, refinancing an existing obligation, or creating time to complete a planned transaction. The proposed use of funds must be clear and realistic.

What Private Lenders Review

A lender will not review a project only because the idea is attractive or because construction has already started. The full file needs to support the request.

Important review points commonly include:

• Property location, road access, driveway, topography, drainage, utilities, usable area, and marketability
• Ownership, title position, corporate authority where relevant, and registered issues
• Existing mortgages, private loans, liens, annotations, taxes, or other legal concerns
• Realistic current property value supported by an appraisal, comparable sales, purchase information, or other credible evidence
• The requested amount and exact use of funds
• The stage of the project and what work remains
• Permits, water availability, access, utility, environmental, or construction issues that may affect value or completion
• How agreed payments will be made during the term
• How the principal balance will be repaid at maturity

Completed, marketable properties can often be easier to review than vacant land, unfinished construction, or specialized projects. Raw land is generally reviewed more conservatively because access, services, terrain, demand, and resale can be harder to assess.

Property Value and Loan-to-Value

Private lenders compare the requested amount with the property’s realistic current value. This is called loan-to-value, or LTV.

For example, a US$200,000 request against a property realistically valued at US$500,000 equals 40% LTV.

US$200,000 ÷ US$500,000 = 40% LTV

For stronger completed properties in marketable locations, requests around 30% to 40% LTV can often be easier to structure. In some stronger files, an amount approaching 50% LTV may be considered, depending on the property, title position, repayment plan, lender requirements, and legal structure.

No LTV amount is guaranteed. A listing price, prior purchase price, construction cost, insured value, or hoped-for future sale price is not automatically the value a lender will use.

Read what loan-to-value means in Costa Rica.

Why First-Lien Security Matters

GAP uses first-lien property security only. Before a request can move toward closing, the lender needs to understand ownership, existing debt, liens, annotations, taxes, payoff requirements, and other registered issues.

An existing mortgage does not automatically prevent financing. However, the current balance, payoff instructions, and legal closing structure need to be clear early. Existing registered debt may need to be paid through the proper closing process so the new lender can register in the required first position.

If a corporation owns the property, the lender and closing attorney or notary will need to review the corporation’s records and signing authority.

Project Costs Are Not the Same as Property Value

Development costs can be useful information, but they do not automatically establish the value that supports a loan request.

A project may have significant money invested in land, design, permits, materials, or construction. A lender still needs to consider the property’s realistic current marketability, completed condition, location, title, and likely resale value. The lender may also ask what would happen if the project is delayed or does not finish as planned.

This is especially important for unfinished construction. The amount already spent is not necessarily the amount a buyer would pay for the property in its present condition.

The Property Is Security, Not the Repayment Plan

A property can be valuable and still not support a workable loan request if there is no realistic way to repay the principal balance at maturity.

• Security: What property secures the loan, what is its realistic value, and can the lender obtain the required first-lien position?
• Repayment: How will agreed payments be made during the term, and how will the principal balance be repaid at maturity?

A future property sale, refinance, business transaction, completed project sale, asset sale, or investment liquidity event may be part of the repayment plan. The proposed source needs to be realistic and supported where possible.

A loan renewal is not automatic. Another lender is not required to replace the loan when it matures.

Read why your repayment plan matters for a private loan.

Permits, Water, and Development Readiness

For a construction or development-related request, the lender may need to understand the project’s legal and practical readiness. The exact requirements depend on the property and proposed work.

Questions may include whether the property has suitable access, available water, electricity, drainage, boundaries, municipal requirements, environmental requirements, construction permits, and plans that match the intended project.

A water letter or water-availability confirmation can be particularly important for projects that need a new water connection. It may come from AyA, ASADA, or another applicable provider, depending on the location and service area.

Read everything you need to know about water letters in Costa Rica.

How the Review and Closing Can Work

The first step is to provide enough information for GAP and the lender to understand the property and proposed request. A complete file can reduce avoidable delays, although each transaction is different.

1. Initial information: Provide the property location, photographs, requested amount, use of funds, value support, and basic ownership information.
2. Property and title review: The lender reviews the property, title position, existing debt, corporate records where relevant, and legal concerns.
3. Repayment review: The payment plan during the term and principal-repayment plan at maturity are reviewed.
4. Loan structure: If the request is workable, the lender, borrower, and closing professionals address the proposed terms, payoff requirements, and legal structure.
5. Legal closing: A Costa Rica attorney or notary handles the closing documents, mortgage registration, and required payoff or registration steps.

After GAP has a complete file and due diligence is finished, qualified loans can often close in about 2 weeks. Timing depends on lender review, title, legal work, banking, documents, existing debt, payoff requirements, and closing requirements. No closing date is guaranteed.

What Helps Start a Project-Financing Review?

• A Google Maps, Waze, or WhatsApp location pin
• Current photographs of the property, road access, driveway, buildings, and surrounding area
• A Folio Real and Plano Catastro, if available
• The requested amount and exact use of funds
• Realistic value support, appraisal information, purchase information, or comparable properties
• Details of any existing mortgage, lien, annotation, tax balance, or legal concern
• Corporate records and signing authority if a corporation owns the property
• Project plans, permits, contractor information, budgets, and completion details where relevant
• A clear plan for payments during the term and repayment of principal at maturity

Lawsen Tellier, Director of Operations, can help explain what is most important first and what can be gathered as the review develops.

Frequently Asked Questions

What is project financing in Costa Rica?

For many property owners and developers, it means short-term financing secured by suitable Costa Rica real estate to complete, improve, reposition, or move forward with a defined project. The property, title, realistic value, requested amount, payment plan, and principal-repayment plan all need to work.

Can I get project financing for unfinished construction?

Possibly. Unfinished construction is normally reviewed carefully because a lender needs to understand current condition, remaining work, permits, realistic present value, expected completion, marketability, and the repayment plan. It may require a lower LTV or may not be workable.

Does GAP require or pull a credit score?

No. GAP does not require or pull a credit score for a normal property-backed loan request. The property and complete loan file still need to satisfy lender requirements.

What security does GAP require?

GAP uses first-lien property security only. Ownership, title, existing debt, liens, annotations, taxes, payoff requirements, and the legal closing structure need to be reviewed.

How long are project-financing terms?

Terms generally range from 6 months to 3 years. Final payment structure, maturity, interest, costs, and early-repayment provisions depend on the lender and signed loan documents.

How quickly can a qualified request close?

After GAP has a complete file and due diligence is finished, qualified loans can often close in about 2 weeks. Timing depends on the full file and closing requirements. No closing date is guaranteed.

Start your loan request here. You can also contact GAP through WhatsApp at +506 4001 6413.

This article is for general information only. It is not a loan offer, legal advice, financial advice, tax advice, real estate advice, or a promise of financing. Loan availability, loan amounts, rates, terms, costs, and closing timing depend on the individual property, borrower file, lender requirements, due diligence, and signed documents.

Article by Glenn Tellier (Founder of CRIE and Grupo Gap)