Asset Backed LC Funding Program
This Asset Backed Credit Line (LC) funding program has our private lender pledging their assets to another lender who would issue a Credit Line or Loan secured by and based solely on the asset(s) being pledged under this program.
The Asset Owner (acting as a Guarantor) will provide the Client's lender the amount of pledged assets they require to set up the Credit Line/Loan either through a “SKR” (safekeeping receipt) issued from The Brinks Company, a Bank Instrument (such as an LC, SBLC or a Bank Guarantee, whichever they prefer to receive) from the lending bank's corresponding bank in Italy, or an Asset Pledge contract of gold bullion from Banca d'Italia (the Italian Central Bank), to be confirmed via SWIFT by a bank in Banca d'Italia's banking jurisdiction or by another Central Bank.
This program is designed for sophisticated clients experienced in high finance who can leverage their existing relationships with banks, hedge funds or family offices to secure a Credit Line/Loan (fully underwritten by the assets) that will provide 100% funding for their projects.
The Asset Owner (acting as a Guarantor) will provide the Client's lender the amount of pledged assets they require to set up the Credit Line/Loan either through a “SKR” (safekeeping receipt) issued from The Brinks Company, a Bank Instrument (such as an LC, SBLC or a Bank Guarantee, whichever they prefer to receive) from the lending bank's corresponding bank in Italy, or an Asset Pledge contract of gold bullion from Banca d'Italia (the Italian Central Bank), to be confirmed via SWIFT by a bank in Banca d'Italia's banking jurisdiction or by another Central Bank.
This program is designed for sophisticated clients experienced in high finance who can leverage their existing relationships with banks, hedge funds or family offices to secure a Credit Line/Loan (fully underwritten by the assets) that will provide 100% funding for their projects.
How to Proceed:
The is a very specific protocol for engaging the lender on this 100% funding option. The Asset Owner is requesting a written fully conditional and non-binding Offer Sheet to understand the terms of the proposed transaction. Once this has been received and confirmed as acceptable to proceed with, they will immediately engage their teams to provide CIS and proof of ownership, all provenance, hallmark, serial number and chain of title information and exchange contracts and pledge agreements.
If you are able to facilitate such a transaction, the gold owner asks to receive something in writing that outlines the fully conditional Term Sheet or Expression of Interest letter (to confirm the basic expected LTV, returns (for trade), or rate & term for credit, timing and process steps) along with a Bank Comfort Letter or equivalent (which is subject to appropriate due diligence, of course) and confirms your group's ability to execute on such an undertaking through one of the offered asset classes. They ask that this document also lay out the preferred process steps that would be followed to engage your group to a successful close.
With the written offer accepted, the gold owner would immediately engage according to the proposed steps below. These steps have been employed on other recent tier 1 Credit Lines, however, many groups struggle to provide the conditional offer outlining the transaction prior to verifying the assets. If your group cannot engage in the proposed manner then there is no path forward as this is a structured approach that must be followed.
The is a very specific protocol for engaging the lender on this 100% funding option. The Asset Owner is requesting a written fully conditional and non-binding Offer Sheet to understand the terms of the proposed transaction. Once this has been received and confirmed as acceptable to proceed with, they will immediately engage their teams to provide CIS and proof of ownership, all provenance, hallmark, serial number and chain of title information and exchange contracts and pledge agreements.
If you are able to facilitate such a transaction, the gold owner asks to receive something in writing that outlines the fully conditional Term Sheet or Expression of Interest letter (to confirm the basic expected LTV, returns (for trade), or rate & term for credit, timing and process steps) along with a Bank Comfort Letter or equivalent (which is subject to appropriate due diligence, of course) and confirms your group's ability to execute on such an undertaking through one of the offered asset classes. They ask that this document also lay out the preferred process steps that would be followed to engage your group to a successful close.
With the written offer accepted, the gold owner would immediately engage according to the proposed steps below. These steps have been employed on other recent tier 1 Credit Lines, however, many groups struggle to provide the conditional offer outlining the transaction prior to verifying the assets. If your group cannot engage in the proposed manner then there is no path forward as this is a structured approach that must be followed.
SETTING UP THE PROJECT LOAN:
Once the path for monetizing the asset has been established the project then goes through the lender's usual intake process. The funds from the the transaction become the "proof of funds" for the project and the lender processes the borrower’s application to receive a loan from them. Once the project has been accepted for funding, the lender would go through the Term Sheet and then contract process - once complete, financing of the project can commence.
The application process will be the same as the 4X Loan Program. The only difference here will be that there is no requirement for a Proof of Funds, as the funding will already be provided by your lending partner through the monetization of the asset.
If accepted, since the lender would be financing 100% of the project, and the borrower/client has no money of their own in the game, the lender will always take an equity position in the project. That position could range between 20% and 40%, depending on the risk profile of the deal, and the actual number will only be discussed once they confirm the monetization of the asset and the term sheet has been drafted. The interest rate of the loan will be dependent on the monetization parameters. If the monetization involves our lender taking a credit line (which will have an interest rate that they pay for), then the portion of capital being sent to the client for the project will be charged AT THAT SAME INTEREST RATE. If the monetization involves a Non-Recourse Payout, and our lender does NOT end up owing the bank interest, they would loan to the project at 3.5% (their normal rate).
The other fees from their regular loan programs also apply - a 3% Lending Fee (due upon close, and drawn from the loan funds themselves), the closing costs of the loan, and the monthly cost of the loan caretaker. No fees are due to be paid until AFTER the project is receiving funding.
Once the path for monetizing the asset has been established the project then goes through the lender's usual intake process. The funds from the the transaction become the "proof of funds" for the project and the lender processes the borrower’s application to receive a loan from them. Once the project has been accepted for funding, the lender would go through the Term Sheet and then contract process - once complete, financing of the project can commence.
The application process will be the same as the 4X Loan Program. The only difference here will be that there is no requirement for a Proof of Funds, as the funding will already be provided by your lending partner through the monetization of the asset.
If accepted, since the lender would be financing 100% of the project, and the borrower/client has no money of their own in the game, the lender will always take an equity position in the project. That position could range between 20% and 40%, depending on the risk profile of the deal, and the actual number will only be discussed once they confirm the monetization of the asset and the term sheet has been drafted. The interest rate of the loan will be dependent on the monetization parameters. If the monetization involves our lender taking a credit line (which will have an interest rate that they pay for), then the portion of capital being sent to the client for the project will be charged AT THAT SAME INTEREST RATE. If the monetization involves a Non-Recourse Payout, and our lender does NOT end up owing the bank interest, they would loan to the project at 3.5% (their normal rate).
The other fees from their regular loan programs also apply - a 3% Lending Fee (due upon close, and drawn from the loan funds themselves), the closing costs of the loan, and the monthly cost of the loan caretaker. No fees are due to be paid until AFTER the project is receiving funding.
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This new funding program is available to any lender who would accept the asset pledge and lend solely against the asset classes being offered. Got questions? Get in touch.
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