How does a lack of physical capital hinder development?

You need to take an economics class so you can learn what the words mean. They do not mean what news readers on tv think they mean. "Capital" is defined as "tools of production". Businesses in the west usually borrow to buy tools, so the loan is called a capital loan, and before long the word comes to mean any funds available for use. But you need to know all those things so you can know what you are talking about and when you are being scammed.

Now to your question: a lack of tools obviously brings physical development to a halt. That is not the same as talking about a lack of money. A few years ago the entire world shipping business was dead in the water because banks had too much money. They stopped lending to guard their own safety, boats could not get gas, and the whole world just stopped for a while.