Summary of Requirements

In3 CAP™ Funding Requirements Checklist

Advantageous Financing for middle-market projects — “faster, easier, better”

To qualify for project funding available from our US family office partner, the following screening requirements must be met, which we call the 4 “S” Cornerstones.

Then, below that, you will find a set of more specific requirements (beyond the 4 S’s), which must be met.

Innovative CAP approach streamlines qualification

To help navigate the inherent complexity of dealing with banks or any other traditional pathway to project funding, In3 CAP’s innovations define “fit” as any project or portfolio(s) of projects that upholds these four cornerstones:

4 “S” Cornerstones of In3 Completion Assurance Program (CAP) — faster, easier, better

1. SIZE:  $25 million or more per project (prefer $50m+); if less than $25m, consider building a “pipeline” or portfolio of multiple, related projects under one facility.
2. SECTOR or SPACE: Delivers positive impacts, ideally (or at least does no social or environmental harm) – more than 30 industries get preferential treatment.  The most active sectors are presently waste-to-value, regenerative real estate, sustainable food systems, affordable housing, and renewable energy.
3. STAGE: Almost any – does not need to be “shovel-ready” (whatever that means per industry expectations). CAP funding is fine with covering the costs of additional pre-construction development work, so long as the majority of Uses of Funds includes tangibles like land, buildings, equipment.
4. SECURITY: Investment (equity and/or debt) can be secured via either a financial guarantee of some sort – usually a bank’s Standby Letter of Credit (SbLC) for 35-70%+ of the total funding required — or cash deposit (compare). This is not a loan guarantee, but instead qualifies for favorable and generous terms with far less stringent due diligence, faster, and more reliably – with greater risk tolerance and thus, certainty.  

Of course, there are often creative solutions to each of these basics, assuming a willingness to make some sort of commitment to working with us as the preferred pathway to funding.  By “commitment” we mean working in good faith to explore options (including possible sources for a financial guarantee) then selecting the one option with the greatest mutual benefit. 

Specific Qualifications for CAP Funding

1. SIZE: Project funding request of $25 million or more
   • Portfolio approach: Funding can be for an individual project or multiple, related projects in a portfolio owned by a single Special Purpose Vehicle (SPV).
   
   
   • Availability/Deferral Period (Interest-only): up to ~5 years: We can finance up to 100% of the budget, but just not less than $25 million; we usually prefer projects of at least $50+ million. In some cases, $100M or above or a portfolio approach is going to get more attention and prioritization.
     NOTE: Traditional ratios for leverage and debt service do not apply to CAP funding. In other words, no new cash (“unexpended funds”) would necessarily be required to reach financial closing when using a completion assurance guarantee. See #7, below.
   
   
2. INDUSTRY SECTOR or “space” for new construction, retrofits, refurbishment, expansion: must involve at least some construction or implementation of tangible project assets. This is typical of most project finance, from real estate development to any type of infrastructure. Preferred sectors here. Ideally, the project would deliver positive social and/or environmental impacts.
   
   NOTE: for clarity, here’s a partial list of what we do NOT finance via CAP funding:
   1. Ventures that seek mostly or entirely working capital (technically, not project finance), or anything less than $25 million, please go here.
   2. M&A or refinancing of existing assets. Why? CAP funding requires a construction completion date against which a financial guarantee can be provided as a type of completion surety. We also use monthly transfers of capital, as close to consistent amounts as possible, making it impractical (but with potential solutions available) to make bulk transfers of funding or “lump sum” financing workable. See alternative 100% funding options to accommodate M&A
   3. A la carte development costs or closing fees, such as debt-only (bridge or pre-construction) loans or any other transaction below our $25M minimum. Solution: consider bundling pre-construction costs with the project’s remaining development work, EPC / construction / Capital Expense budget. We don’t mind covering these minor development costs as part of a CAP finance facility. If you really don’t want to bundle costs, but seek at least $25M, see alternatives.
      
      
3. STAGE of project readiness: Does not need to be shovel-ready (if some additional development steps are needed before construction, that may be fine). Almost anything that a reasonably beyond the idea (concept/inception) stage. All the various uses of funds must be properly disclosed, verified, and fall within standard industry guidelines.
   
   
4. LOCATION of project: The project must be located in a country where we can do business — that is, without US sanctions against it.   Complete list of qualified countries. Ask us if you’re not sure.
   
   
5. SECURITY: Completion Assurance Guarantee (CAG) or Cash Deposit (definition) size and source
   • Guarantee size relative to funding: For optimal terms (mainly the equity carry split and drawdown timing), the client facilitates their own security, on their own, or via a sponsor. In some sectors we can provide a Done-for-You (DFY) service under a separate contract for that work.
   • Duration of Security: If a CAG is used, this is an annual (365+1 days) guarantee instrument that would remain in place at the issuing bank until the project reaches Commercial Operation Date (COD). Cash deposits are held until the final drawdown of investment proceeds (see the next item). Whether cash or CAGs, this security is used temporarily as limited credit enhancement for the developer (such as when seeking 100% financing) — but the CAG typically remains in place only until project construction / commissioning completes. This usually corresponds to the interest-only Deferral Period, but that is just a guideline, not a necessity.
   • Drawdown Schedule: Depending on the leverage used, we would ask for a proposed draw schedule that uses consistent amounts each month over a minimum of 12 months. Most cash deposits use even more leverage than a CAG and thus require longer draw periods. more
   • Source of the Completion Assurance Guarantee or Cash? CAP funding Guarantee can come from the developer if sufficient assets are available to cover the first-year issuing bank fee, or can be from a different stakeholder in the project, serving as a “sponsor“, such as an EPC firm, OEM or General Contractor. More on how Completion Assurance Guarantees help expedite project financing.
6. TRANSACTION: Issuing Bank & Legal Structure
   • Issuing Bank: For sovereign or bank guarantees, use a top-rated bank, when possible. We prefer banks that are SWIFT RMA or RMA Plus registered, but can usually accommodate any rated commercial bank. If you are uncertain, ask us.
   • Legal Entity: Establish a special purpose vehicle (SPV) that owns the project assets, either in the host country, USA, or United Kingdom, or any country we can both do business.
   • Optional Escrow Account: Debt service (loan payments) and distributions handled through the SPV’s bank account, often via a mutually appointed escrow agent, arranged by the developer.
   • TO START:
     • Use In3’s Proposal Builder then apply for funding | At these indicative terms
     • Complete steps to pre-qualify and fund projects
     • Other resources | FAQs

Best Practice Tips

Not able to cover the bank fees or collateral requirements of your bank to issue a qualifying guarantee? Consider either approaching a different bank (fees do vary widely), or involving an EPC firm or General Contractor, if one will eventually be selected to design/build the project, to bring forward a financial guarantee on your behalf? This strategy works on occasion, as the EPC/GC firm often must provide a performance guarantee or completion bond, which some banks may be willing to back as their own (bank-related) guarantee, either a Bank Guarantee, Payment Guarantee, or Performance Guarantee. Here, a partial financial guarantee is similar to a completion bond, but issued by a bank instead of an insurance company. We call this a sponsor.

If the above approach does not solve the “choke point” due to lack of available cash to cover the bank’s SWIFT fee, assuming the source of said guarantee is provably legitimate, talk with us about what can be done to get around this.

To avoid fraudulent guarantee providers, the better practice is to first interview a short list of well-established EPC/GC or OEM companies with a “strategic” interest in your project — those that wish to obtain a contract for your project(s), usually with an incentive for doing so — and select the best offer. This can greatly expedite funding and deliver benefits that outweigh the effort and any costs (paid by our funding anyway) involved in this extra step. If another company brings the guarantee, it is usually free or at least affordable for you!

If none of those options work out for a BG/SBLC, but there is an asset owner with financial depth involved, consider a bank-endorsed (with a stamp by the bank “per bank aval”) Avalized Promissory Note (more) instead. As a last resort, consider In3’s Done For You guarantee services, if your project fits these secondary criteria (PDF) and can afford to cover the deposit for In3’s management services.

Before giving up on CAP funding, please note if CAP is your best or only option?