Does Your Submission Get Attention?

In some instances it's bad to get attention, but, when submitting your funding request you want your submission to stand out - very quickly! Lenders have no shortage of projects to review, so below is a great format to use when submitting your funding request. Since there are so many projects to review, your goal has to be to make your submission stand out very quickly. The format below is geared primarily for real estate, but it can be tailored for other funding requests as well.

Your goal in submitting your funding request is to get the reviewer's attention very quickly, and then support the submission with the appropriate documentation: Client information sheet (CIS), Executive summary, pro-forma's, and all of the other documentation necessary to submit a file that erases all of the possible concern's an underwriter may have. By submitting in this format, you've done the underwriter a favor: you've helped them know what to expect before they even review the submission.

Project Submission Format:

Subject: Funding Request: Insert Name and request info

Project Name: Pretty self explanatory

Property Location: Can be city and/or state, or more specific to begin review process

Summary:

DEAL (Simplified) – Brief Description of how the transaction is structured, and some of the pertinent details. Two or three sentences would be good.

PURCHASE/Refinance/Monetization: Detail what you are trying to accomplish

THE PROPERTY/Collateral: Brief description of the property and/or collateral for the project:

CURRENT ZONING/ENTITLEMENTS- This detailed how the current project was structured, and how this may change

TAX CREDIT- This details the fact that the tax credits (economic incentives) are included in the project. Enhances the collateral since the tax credits are able to be sold (monetized)

EXIT STRATEGY- This detailed the developers plans for how the debt was going to be retired, and the profit potential for the project.

FUTURE ENTITLEMENTS: In this instance there were future entitlements that needed to occur

FINAL LOTS- Developer was acquiring land, and was going to put lots in place that would lead to a substantial increase in value.

OWNERSHIP HISTORY- Narrative of the owner, and ownership of the project/collateral

APPRAISAL- Substantiated the value

USE OF FUNDS: How funds are to be spent, and timing of same

Attached within zip file

Executive Summary,

Source and Use of Fund

Pro-formas

Loan Request

Personal Resume

Copy of Passport

Credit Enhancement Program

In today's lending world only the best projects and best clients are able to get financing, and many projects and clients just aren't strong enough to induce a lender to risk their assets. There is a solution: a credit enhancement. In effect, the enhancement provides an additional level of collateral in order to induce the lender to make the loan. Below is a description of how the program works, and contact if you need access to this resource to help get your project funded:

The product is primarily utilized as a "credit enhancement" type product. There are two principal types of uses for the product:

1) to serve as a "balance sheet enhancement" for certain types of entities that have regulatory capital minimum requirements...in particular insurance companies, banks, and investment banks

2) to be paired with a lending institution whereby the lender accepts the Treasury derivative securities (TDS) as primary collateral for making a loan, and the TDS group takes the collateral from the company that would normally go to the lender

The minimum loan size for both transaction types is $10 million, and large transactions are preferred. Opportunities in the hundreds of millions are a good fit, they can technically go into the billions but good quality projects at that level needing these types of capabilities are rare. The minimum loan period is 12 months, they much prefer lengths of 5 years or longer. The typical cost of the TDS is around 7.5% per year, and they are not interested in revolving credit type situations where balances are drawn and paid down on a regular ongoing basis.

Life insurance companies are an ideal fit for the first transaction type as their models are very statistically predictable. As a general rule the insurance companies would get a loan of the TDS which can go on their balance sheets as "capital" vs. debt, and thus be able to write additional premiums pursuant to regulatory requirements and limitations. The TDS firm takes a pledge of controlling interest stock or other types of assets as collateral. It is much less costly than raising equity and much easier in an environment such as this, and the program works perfectly where the insurance company bank does not need cash.

With the second transaction type, the TDS must be paired with a lender. The lender takes the TDS as primary collateral, leaving the borrowing company's stock and tangible assets as collateral for the TDS. We would generally expect to lenders to lend against the TDS at a rate of 4-6% per annum, making the all in cost in most cases 12-13%, not counting our fees.

The TDS has as an underlying instrument a U.S. Treasury bond, typically of a minimum size of $3 billion. Every Treasury bond carries a unique CUSIP identifying number, and the bond is then "carved" into smaller segments which carry their own unique CUSIP number for tracking...and to ensure that there is no possibility of fraudulent duplication of the value of the underlying asset. The maturities of the underlying bonds vary, so references are always in terms of market value...not face value. As a general rule, we would expect lenders to lend to at least 90% and potentially 95% against the market value...which is a direct function of the length to maturity. There are no "interest coupons" accompanying the TDS product.

Only high quality, low risk projects will qualify as the group managing this portfolio of Treasury bonds has no interest in earning even higher yields by pursuing riskier opportunities. Examples of acceptable projects would be sound infrastructure projects, energy projects (but not "wildcat" type oil drilling and mining, etc.), high quality real estate projects (land, existing bldgs., and construction). There is particular interest in casinos (including tribal casinos in the U.S.). U.S. and foreign "stable" countries are the geographic area of interest.

Are You Looking To Monetize A Financial Instrument?

Financial instruments like stand by letters of credit, bank guarantees, and other financial guarantees are virtually the same as cash. When you have a financial guarantee, a funder is looking to make certain that the instrument is "cash backed" and "callable": the funder can go to the provider of the instrument and expect repayment of the funds in short order from that provider.

Many people purport to have the ability to "monetize" financial instruments, but, at the end of the day, are not able to do so. In many instances the instrument may be something that can be monetized, but the client does not have the correct procedures necessary to accomplish their task.

Below is a set of procedures from a funding source that will monetize financial instruments: provided you follow the procedures listed below. These procedures came from the funding source, so, if you can follow the procedures listed below, you can obtain funding. Let us know if you have a financial instrument that you are looking to monetize.

Transaction Process Summary

The fund is a private U.S. source lender with several billion dollars in verifiable closings.

Funding overview:

a) All transactions must have a “sum and date certain guarantee” issued by top 25 banks.

b) The instrument can not be leased or encumbered so Lender can be fully repaid directly in first

position if necessary. Loan proceeds may be used for any purpose - personal or business.

c) Minimum transaction size: $10 million. Initial maximum size $100 million, possible $1 billion+.

d) APR 5% - 9% fixed interest only. Rate based on transaction size and strength.

e) Funding Term: 1 year minimum for $100M+. 2 years minimum for less than $100M. Up to ten years

balloon payment available with deferred principal and interest calculated at semi-annual compounded

rate of 5% - 9%, based on transaction size and strength.

f) In exchange for equity share in project, interest rate can be reduced by 1 - 2 points.

g) Memorandum of Understanding issued within 24–72 hours of receiving completed information.

h) Financing structure options: Principal & Interest, Interest only, Balloon payment with full deferment of

principal and interest for up to ten years or other customized payment plans possible.

i) Lender does not issue a letter of intent or commitment letter, instead a contract will be issued once

the borrower’s capacity to provide the guarantee has been verified.

j) Success fee of between 2–4% plus participation shares/points, based on the size of transaction.

Financial institution or corporate guarantees

a) Guarantor must have a presence in United States.

b) Instruments issued by any global HSBC office would be acceptable so long as the issuing bank

identifies their US counterpart at HSBC in New York.

c) Corporate guarantees must have an investment grade rating (BBB+ or better, according to S&P).

d) Guarantees must be secured by LOC, COD or approved collateral/assets assignments.

e) Full disclosure as to origin and owner of the underlying funds or assets backing the financial

guarantee or instrument.

For all banking instruments used in transaction:

a) Borrower provides Lender with bank representative's contact information and notifies the bank of

Lender's intention to provide the loan against a secured instrument issued by the bank.

b) Lender provides Borrower with bank reference to confirm Lender's capacity to fund.

c) Bank provides Lender with sample draft of instrument.

Documentation:

a) Complete due diligence and finalized terms of the loan agreement with the borrower.

b) Loan agreement and other supporting legal documentations are drawn and submitted to Borrower

for conditional approval.

c) Closing document drafts and legal opinions to be reviewed by both attorneys and mutually approved.

d) Transaction closing date to be scheduled.

Closing process (simultaneous escrow):

a) Instrument is drawn in favor of escrow agent with Lender or its assigns as beneficiary.

b) Lender will fund borrower’s escrow account.

Required Information for Issuing a Memorandum of Understanding (Term Sheet):

1) Transaction Summary: size, terms and structure desired for use of funds. Names of principals

involved in the transaction with contact information and biographies.

2) Contact information: US legal counsel or law firm representing the borrower.

3) Contact information: Bank representative and/or guarantor.

(Banker/Guarantor can furnish a Letter of Intent or provide a verbal confirmation to verify borrower’s

capacity to secure the guarantee).