|
About Our Multiples Based Loan ProgramsThis private wealth lending program has been offered to select clients since 2005. it has funded a wide variety of projects and other lenders funding projects for everything from Commercial Real Estate Development and Technology Startups to Hotels and Resorts, to Mining, Infrastructure Projects and more. This program can be used for New Construction, Working Capital, Acquisition Rollups and Refinancing.
Our multiples based loan program is based on "multiples" of the borrower's "Initial Funds Deposit". The project owner is required to bring a minimum of $10M USD to the loan, whether it's their own capital or raised using an investor or lender. We refer to this as the "initial funds deposit" or "deposit". The loan is always a multiple of that initial amount, anywhere from 1X to 4X.
|
The 4X Loan Redefined
|
JANUARY 2023
The minimum amount of funds required for an Initial Funds Deposit to qualify for this program is $10M USD/EUR. Initial Funds Deposits are bonded with a registered and regulated security where both your capital and your interest are fully insured. Interest is US 12 Month LIBOR plus 200 basis points The Bond coupon pays 5% per annum (paid monthly) on all loan deposit funds (down from 7% in 2022). Deposits can be pledged to the bond via US Treasuries, CDs (Certificate of Deposit), Cash, SBLC/BG or Gold SKR. See Financial Safekeeping for details New Intake Process focuses on the Depositor's comfort with the safekeeping options in advance of the project's loan application. 
|
HIGHLIGHTS
|
How it works:The basic methodology behind this program is the role the initial funds Deposit plays. The Deposit is set aside and bonded, and its this that allows the wealth lending platform to generate the multiples (of the deposit amount) to furnish the loan. When the funds are bonded they are pledged to a fully licensed, registered and regulated bond (though they never need leave the Depositor's bank account), this shows the regulators that the appropriate amount of funds have been "set aside" by the project owner/depositor. When the initial funds are positioned in this way, the lending group's bank expands them multiples on their existing credit lines and they use this additional credit to fund the loan. There are no direct ties between the borrower/the depositor and the lender's credit lines. They simply access their own credit lines to fund a private loan between two private entities.
If your initial funds have been provided by a 3rd party investor or lender who wants those funds returned to them prior to the repayment of your loan, then you should structure your project and application package in such a manner that you can repay the investor from your loan disbursements. Note that the multiple that you will be approved for may not necessarily be the same as the multiple that you've requested, so this will be a dynamic exercise. There are several methods available to borrowers (or their investors) that ensure the initial funds are positioned appropriately throughout the loan term. All deposit options fully guarantee the safety of the Depositor's capital. To see how these funds are safely protected against all perils, please see the "Financial Safekeeping" below. Loan Program Recap
|
Make Contact. Learn More. Get Funded
|
As mentioned the key element of our lending programs is the requirement for an Initial Funds Deposit. It is the existence of the borrower's project, coupled with those initial funds already being set aside in a regulated environment, that makes the multiples based lending program possible.
The only requirement of those initial funds is that they remain in safekeeping throughout the loan term. If those funds were to become otherwise encumbered or depleted in any way, it would violate compliance requirements and cause the loan to collapse. As a result, to ensure compliance with all banking regulations as well as similar requirements from the lending group's insurance partners, there are specific methods and oversight required to guarantee that the deposits funds will remain positioned appropriately throughout the loan. NOTE ** The bond for lending programs has a coupon rate of 5% per annum (This is not the same bond coupon used in our Project Sponsorship program). That means that during the time the deposit funds are in safekeeping they will continue to earn a well-above-average guaranteed return of 5% per year. Proceeds are paid monthly by the Bond Group directly to the bondholder, so in most cases the bond is paying out proceeds before the loan has even completed its 60 day compliance process. The full disclosure package about the bond must come from the Bond Group, as they are fully regulated and licensed in the sale of securities. AT ALL TIMES, in everything having to do with your Initial Funds Deposit the Depositor will be dealing ONLY with licensed and regulated securities and banking entities, so they can have full confidence in the security of the process.
Once the Depositor is directly in touch with the Bond Group, they receive full information from them about the bond, the guarantees behind it, and a full description of the security of their funds. The Depositor can take this information to their bankers and securities lawyers to examine - as it will stand up to any level of due diligence. With those initial deposit funds secured in the Depositor's own account and pledged to the bond, it will generate the appropriate multiples for the loan, and begin paying out the monthly proceeds on the 5% coupon rate. Any Depositors following this process (on behalf of the borrower or project owner) will again only work with licensed and regulated securities and banking entities, so they again have full assurance of the security of their initial funds at all times. There are four approved methods (listed below) for this assurance currently available. All four of these methods have been designed to specifically ensure Depositors that their funds are fully guaranteed and secure at all times.
METHOD 1. THE BORROWER PURCHASES US TREASURY BILLS, AND HOLDS THEM ON ONE OF THE BOND GROUP'S CUSTODIAL BANK'S AMERITRADE PLATFORM.
The borrower or investor making the deposit can purchase US Treasuries (aka T-Bills) from their own Bank. These will be purchased in the depositor's own name and registered with the US Government as such. Then with the assistance of the Bond Group they will arrange to have those US Treasuries forwarded to TD Bank New York, where they will continue to be held in the Depositor's name so that the bond can be issued to them in their name as well. Clients prefer this method over the other methods because their funds in the form of T-Bills always remain in their name. With a Certificate of Deposit, the CD must name the Bond Issuer as the CD beneficiary. It is true that due to how the CD and Bond are set up there is no risk with that process, but the T-Bill option is proving to provide "more comfort" to the Depositor. As well, it offers the added bonus that Depositors can purchase US Treasuries no matter where they are in the world (which can allow funds held in less stable banking jurisdictions - eg China - to be used easily). There is no cost to utilize this method and it is simple to purchase US Government Securities, and can be done by virtually any bank right at the counter. A further advantage to using T-Billis is that they earn interest. So the Depositor would also receive a few additional points on their capital (in addition to the bond coupon) that would be paid to them by the US Government due to their T-Bill participation. Google "US T-Bill Rates" to see the current interest rates being paid by Treasury Bills. NOTE * the bond has a coupon rate of 5% per annum, that is paid monthly to the bondholder. METHOD 2. THE BORROWER'S INITIAL FUNDS AMOUNT TO $10M USD/EUROS OR MORE; FUNDS ARE SECURED BY A REGISTERED / REGULATED BOND, AND FUNDS REMAIN IN THEIR OWN ACCOUNT AT THEIR EXISTING BANK.
In order to receive a multiples based loan greater than 1X, the initial funds deposit must amount to $10M USD or more. If the Depositor banks at a “Top Tier” bank in an acceptable jurisdiction, their initial funds can be allowed to remain in their own bank account, under their control. This account must be set up in a way that still allows the loan multiples to be processed correctly. This would be accomplished by the borrower creating a brand new SPV that will never do anything but own that bank account, and house the Project's Deposit. The Bond Group would work with the Depositor's bankers to "block" that account in favour of the Bond. Usually this is done with the issuance of a returnable "CD" (Certificate of Deposit), which pledges those funds to the Bond. CDs are usually valued at 100% of face value, so in almost all cases there will be no discounting and the full CD face value will be used as the base amount for the loan multiples. Once the Depositor is satisfied that the bond and financial guarantees behind it fully secure their funds, one of our banking compliance officers would be added to the SPV bank account as a signatory to have full access to the account to monitor it at their discretion. Since the funds will already be blocked, there is no possible way any signatory can do anything with them - however we also recommend that all SPV bank accounts require multiple signatories for any activity, to provide Depositors with that additional peace of mind. METHOD 3. THE INITIAL FUNDS DEPOSIT AMOUNTS TO $10M USD/EUROS OR MORE; FUNDS ARE SECURED BY A REGISTERED & FULLY REGULATED BOND, AND THE DEPOSIT FUNDS ARE HELD IN SAFEKEEPING WITH ONE OF THE BOND GROUP'S CUSTODIAL BANKING PARTNERS.
If the Depositor does not deal with a Top Tier Bank, or if their bank is unable to issue a "CD" they will have the option to move their funds to one of the Bond Group's custodial banks. The process for receiving information about (and confirming) the bond will be the same as described above, but rather than the Bond Group working with a returnable CD from the Depositor's bank, the funds would be required to be moved to one of the custodial banks. Depending on the Depositor's location, the custodial bank used may be in US (NYC), UK or AU. If the Depositor is using a custodial bank, that bank will provide their own guarantee (on a bank to bank basis) that they will hold those funds in a non-deplete account (where the funds cannot be moved anywhere but back to the account they came from), that the funds can be returned to the client (Depositor) with 60 days written notice, and that in the event of any “default” the funds will be returned immediately to the account from which they originated. The Depositor's own banker will provide them with the details of that bank-to-bank communication and guarantee. There is another option where a cash deposit can be wired to an affiliate SWISS BANK, who will set up a new account in the DEPOSITOR'S NAME. They simply wire from one of their own accounts, to another of their own accounts (now just at a different bank). Once the Depositor has vetted the bond and all other elements of the deal, the bank will issue the Depositor their bond, which represents a formal debt to the Depositor from the issuer in the amount of their initial funds. The Depositor will sign off on it, and wire their funds to the appropriate custodial bank for safekeeping. This bond can be redeemed at any time, with 60 days written notice. However, if the bond is redeemed prior to the loan being repaid, it will collapse the loan and result in its immediate call. NOTE ** As described above this bond has a coupon rate of 5% per annum, paid to the bondholder monthly. METHOD 4. SBLC or BANK GUARANTEE – MINIMUM $10M USD/EUROS or GREATER (initial funds remain in Depositor's bank account, and a SBLC / BG / CD issued by their bank)
Utilizing this process we can ONLY work with Top Tier Banks in highly stable banking jurisdictions. Under this method the Depositor's (borrower/investors) capital will remain in their bank account, and that bank would issue to the Bond Group's assigned bank a “banking instrument” such as a “SBLC” (Standby Letter of Credit) or “BG” (Bank Guarantee). Keep in mind that the issuing bank will charge fees (often substantial ones) to create, issue, and eventually recall and liquidate these instruments, and those costs will be fully the responsibility of the Depositor. Both banks (issuing and receiving) will set up the transaction in as way that the SBLC/BG will be held by the receiving bank until the loan is repaid in full; at the end of the term it will be returned in full value and without encumbrance. This will likely require the Depositor to obtain extensions on the instrument used. SBLCs/BGs are typically discounted by the receiving bank (as the funds are not in their institution). In most cases the value of this instrument will be discounted to 80% of the face value, and the amount of the loan multiples based on the discounted amount. The discounted amount will also be bonded via the same banks/securities companies, so the discounted amount will also receive the monthly payout of their 5% annual interest on the discounted amount. Please note: this process is meant for clients that have a high level of sophistication in banking and finance, and who will deal directly with bankers who have extensive experience in setting up such instruments. |
New Intake Model |
|
As you can see as outlined in the Financial Safekeeping section above, the success of this program weighs heavily on the Initial Funds Deposit. We have encountered many project owners attempts to leverage an investor's capital to position their Initial Funds Deposit and it has become clear that the FIRST STEP in our process needs to focus on the education and comfort of the person making the deposit on behalf of the project seeking funding.
It is only when that person fully understands the safekeeping options available to them that we can proceed. To accomplish this our INTAKE PROCESS has changed for 2023. Now to engage with our lending platform the Bond Group will need direct contact with the Depositor - the person whose capital will be pledged to the bond for safekeeping. In order for the Bond Group to engage the Depositor directly, they need to be presented as a Sophisticated (Accredited) Investor, a regulatory requirement with an investment of this nature. As a result we require the Depositor's CIS (Client Information Sheet), a valid and current POF, a scanned copy of their passport, along with a 2 page project summary and a signed NDA. With that Intake Package we will present the Depositor to the Bond Group and they will contact the Depositor directly to review the bonding process, showing them how their funds are secure and fully guaranteed, and tp also review the best loan option for the project. Only once the Depositor has confirmed their comfort and willingness to move forward will the lending group agree to accept a formal loan application for the project. At that point, we will provide you with our Finder’s and Financial Agreement for signature and with the agreement executed, work with you to complete and submit your full application package. If you have any questions about our safekeeping processes, please contact us today.
|
