Disrupting the Debt Capital Market
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Wholesale Debt Financing |
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Forget what you know about typical banking or conventional loans, this is DEFINITELY not that.
Unlike traditional banking, conventional lending or venture capital solutions; this is a privately owned and operated wealth lending platform. These programs are possible because of the very privileged relationship our lending group enjoys with their banking partners. These programs offer borrowers an unconventional approach to business loans and project financing. The mechanics behind these programs involve sophisticated international financing structures and it is important that you know that this is NOT a retail lending experience. We rely on the security that is built into the structure of are lending mechanism, meaning the transaction itself provides all the assurance necessary to provide borrowers with the confidence they need to proceed. As a result we simply do not waste costly and endless hours supporting typical retail lending due diligence practices, like giving potential borrowers access to our valuable clients. |
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This is not domestic banking. This is not retail lending. This is PRIVATE WHOLESALE Lending. |
We are Disrupting the Debt Capital Market
Wholesale Financing with the 4X Loan
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The Global 4X Loan Program is an unconventional debt structure that leverages your capital for maximum impact. As the borrower, you need to have either 20% or 25% of the funds you need already raised (in cash) to serve as your initial funds deposit. The loan is typically four times your deposit amount. The loan is at the wholesale rate of 3.5%, it is an interest only structure on a standard 48 month term and the lender will convert to permanent financing at below market rates. This is non-recourse loan, meaning no personal or corporate guarantees.
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About Us |
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Bonnie Walker is the Founder and CEO of weLLcome capitaL. weLLcome capitaL is under contract with our private wealth lending platform to market these lending programs globally.
We are building an elite network of professional intermediaries and referral partners and together we are bringing these unconventional wholesale funding programs to capital seeking companies around the world. |
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Searching for the Right MixWhen a company decides to enter the market to do an open capital raise, they focus on gaining access to the investment they need. However, we know that the cost of raising equity reaches far into the future and sometimes presents painful consequences down the road.
Entrepreneurs try to protect themselves as best they can; negotiating deals and terms they can live with, as they strive to attract investors and minimize their own dilution. With stock dilution, sometimes referred to as equity dilution, existing shareholders experience a decrease in their ownership percentage of the company as a result of the company issuing new equity. The equity injected increases the total shares outstanding which has a dilutive effect on the ownership percentage of existing shareholders. Raising debt financing can be a good alternative but expensive in the short term when dealing with hard money lender types, but in the long run it can still yield better results than an equity raise. There is a big problem with raising debt nancing however, and that is having the assets to secure a loan big enough to reach the capital threshold necessary to achieve the plan. The ideal solution would be to find a non-recourse loan where you don’t need the collateral upfront to secure the loan. With that type of loan, you could structure your raise with the right mix of debt and equity. The lender could structure a non-recourse loan with a General Security Agreement (GSA aka Lien) against the asset being developed and as the loan is spent into the project, the project itself increases in value. The lien secures the loan, whether the funds are spent on physical assets or developing intellectual property. Obviously using pure IP would be a very unconventional approach and a high risk loan for the lender. It would mean if the loan defaulted the lender would foreclose on the project, even in the case of developing Intellectual Property, while this is much more difficult collateral than physical assets would be, it is still possible. |
Here is a capital strategy scenario:
For this example, we will assume you and a wholesale debt lender and you are able to leverage your capital to generate the credit facility you need. The company is raising $35M and the proposed mix is $15M in equity and $20M in debt financing, albeit wholesale debt financing. The question is: What terms would you need on the debt to make this all work in your favour? What if I told you that the wholesale debt terms were as follows: Interest only for 48 months at the wholesale rate of 3.5%; and further to that - no personal or corporate guarantees. There are also no early payment penalties on the loan. The lender will convert to permanent financing at below market rates or extend the Interest only term if necessary (in 12 month increments). And finally, the monthly tranche schedule would see the loan deployed across 9 to 13 months (or longer in the case of large Commercial Real Estate projects). Just to recap the strategy again here: on a $55m capital target, the equity raise is $15M. The company could then take $10M from the equity raise and leverage it with our wholesale debt lender to generate a $40M credit facility. The company would still have $5M from the equity raise on hand and would be drawing down on the $40M in the credit facility over the next 12 months. The initial $10M deposit is returned when the loan is settled. It is a rare that any business would need to access to the full capital target of $55M within the first year, so the twelve monthly draws would typically not be an issue. With this strategy the company raises $55M and gives up equity on only $15M. Raising less than a third of the capital in equity will go a long way to preserving their cap table by minimizing their dilution with new equity partners. Obviously, this would pay huge dividends to the existing shareholders over the long run. What do you think of this approach?
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Make informed decisions about financing your company.
