This is NOT a leased bank instrument !
Our lender secures a bank instrument from a top 25 bank instrument provider. This bank instrument is owned
and title is assign to our lender. The lender will then assign the bank instrument which is owned to it's
syndicated group on investors. This is what creates your project financing.
The bank instrument loan is a combination of debt and equity. Equity position will be determined based on
project merit, management, current equity in the project, liquidity, and money invested into the project. Equity
position is based on the following.
The Federal Reserve has come out with new guidelines for private lenders that offer 100% loan to cost for
construction and development projects using warehouse lines of credit. Those borrowers that do not meet
these guidelines, our lender will put up the cash and assets in exchange for an equity position. Percentages
will vary depending on the risk level. To avoid a equity position from the lender.
The Bank Instrument Lender offers five options for financing projects using the bank instruments
Home State Funding Solutions Bridge loan can be used to pay the collateral commitment fee.
The fees below are if the borrower has the bank instrument fee. If the borrower is utilizing an investor or bridge lender and the investor or bridge lender wants the interest for the use of his money added to the SBLC then the SBLC fee will go up accordingly.
$25M Bank Instrument Program
Provides $15,000,000 in project financing
Collateral Commitment Fee: $600,000
Fee for $1,000,000 SBLC: $200,000
Cost to project to secure $25M = $800,000
$50M Bank Instrument Program
Provides $30,000,000 in project financing
Collateral Commitment Fee: $1,200,000
Fee for $1,450,000 SBLC: $250,000
Cost to project to secure $50M = $1,450,000
$75M Bank Instrument Program
Provides $45,000,000 in project financing
Collateral Commitment Fee: $1,800,000
Fee for $2,100,000 SBLC: $300,000
Cost to secure $75M = $2,100,000
$100M Bank Instrument Program
Provides $65,000,000 in project financing
Collateral Commitment Fee: $2,225,000
Fee for $2,625,000 SBLC: $375,000
Cost to secure $100M = $2,625,000
$500M Bank Instrument Program
Provides $325,000,000 in project financing
Collateral Commitment Fee: $11,250,000
Fee for $12,000,000 SBLC: $1,750,000
Cost to secure $500M = $12,000,000
1. If the borrower has the bank instrument fee of and at least 10% cash in to their project and 25% of the funding amount in additional collateral Lending group will fund straight debt
2. If the borrower has 10% cash into their project and 25% of the funding amount in additional collateral but does not have the bank instrument fee Lending group will put up the fee in exchange for 20% to 35% equity with no buyout clause
3. If the borrower has the bank instrument fee but does not have the 10% cash into their project and 25% of the funding amount in additional collateral then Lending Group will take an equity share of 30% to 50% and no buyout clause
4. If the borrower does not have the bank instrument fee of and does not have the 10% cash into their project and 25% of the funding amount in additional collateral then Lending Group will do an equity partnership of 50% to 60% and no buyout clause
5. If the borrower is using an investor for bank instrument fee and does not have the 10% cash into their project and 25% of the funding amount in additional collateral then Lending Group will do an equity partnership of 50% to 60% and no buyout clause
Terms of the Loan
100% Project Financing or 70% future LTV in year 5.
If it is determined by the underwriter that the project won't reach the 70% LTV. The lender may infuse some of their money to ensure the 70% LTV
Non-Recourse Loan / No Pre Payment Penalty
During construction / development, interest rate will be based on the 1-yr LIBOR plus a 2.5% margin ( average rate 3.3% interest only).
Perm rate is 1-yr LIBOR plus a 3.5% margin (average rate 4.5% interest only)
During construction, interest payments will be deferred until project has stabilized.
Will only debt service on what you have drawn down on.
Lender pays project due diligence up front. Project pays back on 1st draw.
Perm financing will be offered ( 30 yr note 10 yr interest only or 20 yr balloon on 40 yr AM).
Procedurally, these are the guidelines of the Bank Instrument using the Standby Letter of Credit:
1) Sample term sheet and escrow agreements are agreed to in advance.
2) Once borrower / investor /bridge lender is in agreement to term sheet and escrow agreements, the Bank Instrument Lender will issue a nonperformance term sheet fee agreement.
3) Nonperformance fee agreement signed and returned to the Bank Instrument Lender.
4) Term sheet and escrow instructions are issued.
5) Once term sheet and escrows agreements are signed and returned to the Bank Instrument Lender, then escrow is opened and money is deposited.
6) Borrower wire Collateral Commitment Fee into escrow they choose and SBLC fees are wired into a bonded Attorney escrow in New York.
7) SBLC (Stand by Letter of Credit) is provided through electronic transfer into escrow ( MT799 and MT760-like cash in the bank).
8) The Borrower/Investor/Bank will verify SBLC from issuing Bank.
9) Upon verification of SBLC ( Stand by Letter of Credit) by Borrower / Investor, fees are wired from escrow to the Bank Instrument Lender per escrow agreement.
10) The Bank Instrument Lender secures Bank Instrument from (top 50 bank) and assigns it to its syndicated investors for funding proceeds.
11) Within 7 days of securing a Bank Instrument ( which takes place 45 days after the Bank Instrument Lender initially receives the fees) the Bank Instrument Lender wires the collateral commitment fees, escrow fees and interest back to escrow.
12) Within 120 days of the Bank Instrument Lender receiving the fees ( or 75 days after securing the $100M bank instrument) escrow is opened for loan closing on project financing and loan docs are issued. Time frames can vary depending on the project.
13) Funds disbursed 3-4 days after loan docs are signed as per the detailed use of funds schedule- all funding to go through a fund control manager escrow ( First American Title or Grubb & Ellis). Time frames can vary depending on the project.
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