Project Financing Process
One of the most important aspects of our initial assessment of every deal lies in the analysis of the strength and validity of the executive summary. With a well written executive summary the lender and/or investor can acquire an understanding of the intricate particularities of the transaction in a shorter more concise format.
The Executive Summary should be between five and fifteen pages long and contain a description of the project itself and the benefits the project will bring to the community. The principals should mention the results of their feasibility/marketing/competitive analyses that convinced them that the project was worthwhile. The borrower should state the amount of funding he is seeking and for what purposes. If there are deadlines for the project, this should be mentioned. The principals should include a section on their background and experience in similar projects because the most important aspect of whether a project receives funding is the experience of the management team.
- Project Description
- Benefits to the Community
- Feasibility
- Marketing Considerations
- Competitors
- Amount Needed for Funding
- What Specifically The Money Is To Be Used For
- Deadlines (if any)
- Experience of Partners in Project’s Industry (Or Information About Management Company Selected)
- Five Year ProForma Cash Flow Analysis
- Three Year Historical P&L’s When Acquiring On-Going Business
- Exit Strategy – Specifics on How Loan Will Be Repaid
We look forward to working with you to help organize your project(s) for presentation to our sources
If we agree that the project is economically viable and we feel that a funding source (lender) would be willing to fund the project, then we will provide our fee agreement(s) to the client which will detail how we will be compensated IF we successfully fund the project (we are paid upon success and do not charge any upfront fees). Once the client has signed and returned our fee agreement, we will then proceed to submit our preliminary information to one (or more) potential funding sources that we believe are suitable for the project and make introductions to them. Those third-party funding sources will review the project documents and decide if they wish to propose a “Term Sheet” to the client with an offer to fund the project. That Term Sheet will include information regarding interest rates, term (length) of the loan, amortization schedule, percentage equity ownership (if any), etc., as well as the amount of the Expense Deposit required to cover the costs for due diligence activities such as appraisals, accounting audits, title searches and the expenses and any other outside costs, such as legal or title expenses associated with funding a deal. Note that we make no money and the lender makes no money on these fees– they are a cost of doing business item only.
Next, the client will execute the term sheet with the funding source and that company will collect the estimated due diligence fees and begin the due diligence process which will typically take from 45 to 60 days for domestic U.S. projects and 60 to 90 days for international projects. The time frames involved are usually based on the time necessary for funding personnel to make physical site visits to the project locations and the time it takes the principals to submit any additional documentation that is requested by the funding source. You will be notified immediately if there are any changes made to these timing parameters.
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