Getting Started

Getting Started with CAP Project Funding

We provide advantageous capital for mid-market projects (new construction or retrofits, refurbishments or renovations) that fit our sweet spot. We strive to keep an open mind when strong projects and experienced developers are well prepared to secure funding, so long as the project’s construction or operation would not cause (or perpetuate) social or environmental harm.

Although we can accept other risks that traditional financiers would not touch, projects must have reasonably low commercial risk — that is, there has to be a verifiable plan for meeting your financial projections, in order to demonstrate that the proposed project is financially feasible.  See topics 1 & 2, below to know more on this.

For a synopsis of our flagship Completion Assurance Program™ (CAP) funding, what it is, and how it works, please read this introductory letter or CAP 1-pg teaser.

To get started we use a simple, multiple-choice assessment called Readiness and Investment Navigator (RAIN). Please complete this fast/easy pre-application before contacting us, … designed to take you less than 10-15 minutes.  You will receive an overall score, helping identify available options along with recommendations that previous clients have said proved invaluable.

What In3 looks for in client Funding Proposals

We start with 4 CAP cornerstones — Size ($25m or more), Space (a sector in our sweet spot), Stage of readiness, and Security.  But note that for “stage,” we do not require traditional “shovel-readiness”.

For most qualifying clients, their attention goes mainly to understanding CAP’s “Security” an innovative structure that helps developers secure advantageous terms without up-front costs or cash contribution (no additional “skin in the game” required).  CAP can provide full leverage (100%) funding, based on the developer’s ability to facilitate some type of Security Deposit as a “Completion Assurance” Guarantee (CAG).  See the “What’s Unique” table below for how this CAG differs from traditional guarantee types.

Check out Security tips to learn from those who have done this before.  You may also want to begin with RAIN, then carefully review your options, and for Security, immediately jump to these Simple Steps.

The most-often used security is a financial instrument called a Standby Letter of Credit (SbLC), ideally for ~60-80% of the required funding, used only until the project is ready to begin commercial operation, which can be backed by assets (not cash), though some banks will prefer that the guarantor open a Line of Credit with the bank, and leave the line at zero balance as their reassurance your company will not default or abandon the project until delivery. Cash “surety” is the second-most used.  Compare these two.

What’s unique about In3CAP’s Security?  Two “big” differences:
A) Duration — the length of time it is used.  Shorter than traditional guarantees, an SbLC would remain operative (in place) only until the project has been commissioned to begin commercial operation (at which time it is allowed to expire on its maturity date).  Other types of guarantees besides the SbLC involve shorter timeframes (cash surety deposits are released on the final draw of funding) or longer timeframes, such as with Sovereign Guarantees.
B) Its purpose and intended use. What, exactly, is being guaranteed?  Like the name implies, CAP’s is used as completion assurance, effectively filtering out fraud.  Here are 3 examples of traditional guarantees followed by 2 additional CAP security “completion assurance” guarantees by contrast:

* Commercial Operation Date

Compare all types of guarantees

Not sure where to start?  Work with what you have available.  Either non-cash or cash assets, or a “sponsoring” party that does.  When cash is available, such as your own assets (tax credits, liquid or semi-liquid holdings, sale of an asset, existing lines of credit …), a Cash Surety Deposit is usually the fastest and easiest.

Second best is non-cash assets backing a Standby LC (SbLC).  Ask the banker that is most familiar with the asset owner and/or the asset itself, and you’ll save time.

The type of Security that’s best for your situation depends on whether your own bank will cooperate with you to increase your usable asset depth (operating projects are worth far more than the capital used to finance them) or if you will need to involve a third-party guarantor, what we call a “sponsor.”

Sponsors can range from a well-established vendor, or customer, to High-Net-Worth individuals or companies in your network, to a sovereign government or other party that would benefit from your delivery of the project.

To recap so far:

For CAP funding, a usable SbLC is not a loan guarantee, Example #1, above, as there is no traditional loan (senior debt) with CAP funding, thus no need for this traditional form of “credit enhancement” to offset the risk of borrower default.

Nor is it insurance or a “surety bond” as is often supplied by the involved EPC firm, General Contractor, or other major vendor, Example #3, above.  In3 CAP’s security is an innovative and advantageous alternative to these more traditional guarantee forms.

What if you have no financial depth?

For project developers just starting out, or restarting development work as a new company, tap your network to gain support for your project plan as outlined above.  We call the source of Security a “sponsor” — providing a short-term guarantee that you and your team will deliver the project as promised through the investment agreement you will be asked to enter.

Tip:  Be sure to offer an incentive to an involved “sponsor” to unlock CAP’s benefits and advantages. Landing page for sponsors of security (if you wish to share this or additional info with them).

Developers can either facilitate their own guarantee or, with a high enough RAIN score, can apply to involve In3 on a split fee basis to arrange a Done-For-You guarantee on your behalf.  Know more (Security Solutions Center)

To recap, project developers and promoters can follow these basic steps:

1. Assess Project Fit: Ensure the project aligns with In3’s “sweet spot” criteria, which includes a minimum funding amount of $25 million and a focus on mid-market “impact” projects. Our RAIN assessment fast-tracks this step.
2. Pre-Qualification: Developers that fit In3’s basic criteria can lead their team to pre-qualify for funding, greatly increasing the certainty and decreasing risk and time horizons.  This makes many unbankable projects actually financeable. Key here, in addition to your RAIN score, is selecting a form of Security, then demonstrating capacity.  RAIN handles the rest.
3. Propose Security:  When ready to take next steps (usually via an Authorization to Verify letter, sometimes with a bank’s letter ahead of that), we will need to receive the following additional documents (if not included with RAIN):
   • A synopsis or “teaser” for the project, including its name, size/type, sector, if new or retrofit or expansion, location, and purpose of the funding.
   • Confirm the total funding required, and uses of funds (5-12 categories and % of each).
   • Estimated overall project IRR (over 15-25 years) and how you know you will achieve this key performance result.
   • The proposed type and face value of Security (cash deposits are just the currency and amount).
     Security is leveraged based on type, as follows:
     • Cash deposit secures 3x-4x in total investment
     • Standby LCs or AvPNs 1.2-2.5x
     • Securities 0.8-1.2x; Sovereign Guarantee 1:1.
   • A proposed monthly draw schedule — based on the amount of Security relative to total funding. Minimum is 12-15 months, with ~40% cash surety deposit or 80%+ Standby LC, but each situation is case-by-base.  Ask your In3 Affiliate or In3 team to assist.
4. Submit Proposal: Deliver the necessary documents by type. For example, a Standby LC also requires a “specimen” of the wording, so use the appropriate MS Word template to obtain this sample from the bank, and once approved by us, then an RWA letter or equivalent.

Developers can also explore DIY solutions and premium packages for additional support and guidance throughout the funding process. 

See the complete steps for funding from “inception to completion” via CAP funding.  Eventually the complete package will be needed, but to streamline as much as possible, the Six Essentials boil down to just these 3 as the “onramp” to the road ahead:

1) Project name, total budget and funding request in $ or €

2) Uses of funds – categories and amounts / % (sample format), and

3) Proposed security:  Two main DIY options:

A) If Product 1, DIY Standby LC, then also provide the issuing bank’s proposed SbLC verbiage and RWA letter using our templates.

B) If cash surety deposit, then please provide the proposed Authorization to Verify (ATV) letter.

That’s it!  Do you have access, or could you gain such access, to qualifying Security?   

• If yes or maybe a guarantee could be facilitated, please continue, learning more about these bank instruments to help guide you.  Note the following conditions when CAP funding is the best or only option.
• If not, can you qualify for any of our DFY solutions, (products 4-6) via the various checklists and higher due diligence standards associated with each option? In3 Registered Affiliates can often provide initial vetting to help you determine this.  Let them know which solution (product option 4, DFY SbLC, option 5, Ground Lease, or option 6, Strategic Advisory) you prefer.

The rest of this article is about how to arrange a Completion Assurance guarantee.  In brief, either …
a) via your own holdings (company balance sheet or other assets)
b) via a “sponsor” (such as an EPC contractor, construction firm or major equipment supplier to the project), or
c) by hiring an advisor to help you obtain it. 

More on guarantees as well as further instructions here.

In3’s CAP Profile Builder is where you will find all templates and tools to obtain a usable, bank-involved financial guarantee as well as to summarize your project finance request to pre-qualify.

Per the first 3 “essential” items above, we look forward to receiving your project name/type, total budget, uses of funds, and bank’s proposed guarantee (SbLC, usually) wording for our review.  All templates available at-a-glance here.

Once prepared, use our “Onboarding” System to apply for CAP funding

If you have questions, want help with preparation, or wish to benchmark your project against our standards, we probably have additional tools available at no charge.  Just ask us!

We will keep all information entirely confidential.  Our review for CAP funding is free.  We usually respond within 48 hours, but since Summer of 2021 we have been back-logged due to the COVID pandemic (presently about 2 weeks behind).  Thanks in advance for your patience.

In the interim, if you have questions, please review our background materials, including

• Definition of “Completion Assurance (financial) Guarantee“
• Decision-making guide: Guarantee Options to select the best one for your situation
• How we (happily) disrupt traditional project finance (full-length version)
• Indexed Frequently Asked Questions (CAP), and Success Tips, to please make sure we’ve not already answered your initial question online, then (if still needed) Email or call us +1.831-761-0700, preferably during US Pacific Time business hours (9am – 7:00pm PT).