What Makes In3CAP Funding Different?

Introducing In3’s Completion Assurance Program™ (CAP), an innovative approach to private funding for impact projects worldwide

This article captures our flagship funding program’s purpose, goals, benefits and advantages

Faster, easier, better

Delivering the advantages of affordable capital via a true equity partnership (sometimes called a “Joint Venture” or JV), In3’s Completion Assurance Program™ (CAP funding) stands apart from traditional project finance. Developers gain access to streamlined, fast and flexible capital without the funding partner expecting a controlling interest, using a combination of equity and non-recourse mezzanine debt (or just equity), even when seeking 100% financing, or if the project happens to be at a relatively early stage of readiness/bankability. When is CAP your best or only option?

Even more important, especially to anyone who knows how challenging it can be for developers to reach predictable closing (an “adventure” at best), In3 can tailor CAP funding to the situation at hand, so long as there is at least a partial Completion Assurance guarantee (CAG) or 25%-35% cash deposit on the table.

We do not expect the project “owner” or a “sponsor” to contribute either a CAG or cash to fund the project itself. The CAG and cash are used as a “security deposit” only, and contractually arranged as a way to screen out fraud, so if you are not fraudulent, this approach delivers more generous terms, no obligation or initial costs for qualification, expedited closings, and far greater predictability and flexibility than the traditional route. Traditional funders include bank loans and private lenders or equity investors that use much higher standards for risk mitigation, stage of “shovel readiness” and owner equity “skin in the game.”

Without a CAG or cash deposit, a sponsor’s role becomes more maker/breaker. Even with a sponsor, projects can become financeable and receive funding with a similar timeframe — at most 30-45 days to first drawdown once the package is approved with binding terms contractually arranged to reach closing.

This bespoke funding isn’t for everyone, but it does resolve the notorious problems associated with arriving at financial closing without unsavory, last-minute surprises; it eliminates much of the guesswork, saving time by going slower at first (to secure a guarantee) to reach financial closing faster and more reliably. CAP’s process serves to avoid the “blind alley” of traditional project funding, transforming it from “one size fits [almost] nobody” to “one flexible program that delivers it all.”

How? Who is involved? In3 manages a type of “committed capital” from a private, global, family office Impact Investor based in the US, which we offer as the preferred solution for funding mid-market projects when there is an asset-based financial guarantee of at least 30% (ideally, more like 70%), or minimum 20-30% cash deposit, plus just a few other conditions are met (for example, $25m minimum, $100m preferred, in sectors and countries where we work, with an approved schedule of relatively consistent monthly draws, not lump-sum distributions of all the funds right away). Why? CAP funding is usually about building something — new infrastructure, buildings, power plants, farms, forests, production facilities, etc. Such construction would never require the funding all at once, so we have compliance measures we must satisfy.

We can also fund retrofits or refurbishments, expansions and complex/structured finance or portfolios in multiple phases under a single contract.

We’re largely agnostic about the industry sector, so long as proposed projects do not cause or perpetuate environmental or social harm. With global reach, the main difference is CAP funding seeks to use a partial, non-cash financial guarantee or minimum 20% cash to ensure project completion.

In the unlikely event of a lack of completion (developer default due to fraud), the sponsoring guarantor, or remaining equity owners, could be given rights to step in and finish the job. In practice, the CAG instrument is not called. Once built and ready to begin commercial operations, the guarantee expires and is removed, then the partners rely on the equity split not senior liens, loan guarantees, or even credit insurance for repayment of the funding. In 2024, there is often no loan at all, as interest rates have gone higher, making less profitable projects more easily financeable this way.

Guarantees are not always workable, or available to every developer, but CAP funding is likely the fastest, most affordable and reliable source of capital available for qualified projects in the countries where we work. There are no up-front fees. How We Work

Jump to this intro cover letter for more about this advantageous funding, or keep reading to learn more about the purpose, differences and advantages.

CAP was created to streamline and accelerate project finance, solving these 4 notorious problems

What this accomplishes

Difference #1: Radically Improved Funding Certainty

Few to zero mid-market project investors can offer developers predictability, or certainty, as well as advantageous terms and conditions plus speed (typically 30 days or less to closing) for access to up to 100% financing. We do. Our unique structure enables us to provide a faster yes/no and then make the ultimate funding decisions (binding contractual terms) without missteps. See below for how.

Difference #2: Funding at any stage of readiness, non-traditional risk tolerance

Your project does not need to be ready to turn dirt (RTB, NTP, or “shovel ready”) — any reasonable stage beyond just an idea can qualify for CAP funding. Definitions of “shovel ready” and tolerance for risk vary widely. So long as the project — greenfield/new, refurbishments, or expansions — is soundly based on financial fundamentals, and makes sense as a business, we will be interested.

More on risk/reward at Insurance Options for Project Owners

Difference #3: 100% financing without giving up control

We offer a combination of low-APR mezzanine debt (no lien or collateral once project assets reach operation) and typically a carried interest (equity shareholding) that does not seek risk-adjusted returns, or majority voting rights, even when the developer seeks 100% financing (that is, when little or no additional cash can be invested from the developer’s side). We only ask that a party facilitate a partial financial guarantee as completion assurance using well-proven instruments and secure SWIFT for mutual safety.

Difference #4: No “loan guarantee”, senior lien nor bonding needed

As mentioned in Difference #2, the Family Office accepts credit/operational risk once the project reaches completion (COD), as the guarantee instrument is allowed to expire and is released on its maturity (expiration) date; thus, going forward, a true equity partnership becomes the basis — the partners thus succeed together and benefit proportionately.

Completion and performance bonds are typically insurance products used by the developer to hold hired contractors accountable, but our innovative structure instead seeks a financial guarantee; insurance does not qualify as a financial (bank-involved) instrument. This matters due to the Family Office’s own funds per agreements with their bank relationship managers. The project’s funding must involve a bank on both the developer (or sponsor) side and the funding bank. Insurance companies are a different type of institution altogether, with insurance policies often useful for other reasons.

How In3 CAP Funding works

To pre-qualify, request our worksheet for describing CAP funding’s Six Essentials.
To make a winning proposal, use our CAP Proposal Builder (provides handy tools and templates)
Complete, end-to-end CAP process in 3 stages.

Spotlight: CAP Funding Objectives

Through its “Next Gen” Guarantee Program, In3 Capital aims to:

Mobilize private investment (equity and debt) for strategic projects or sector support — we give preference to more than 30 sectors.
Reduce costs and improve financing terms (capital becomes more affordable, provided more quickly and reliably, and for longer loan periods) for project developers, their sponsors, service providers, and governments
Greatly accelerate the speed at which impact projects come online while ensuring the long-term sustainability of such projects.
Build a diverse portfolio of long-term projects, without a pre-determined calendar date to divest or sunset the assets, like most funds require. The available capital is not organized as a fund. It is a finance facility.
Post-COVID update: This target diversity now proves that less bankable projects (earlier stage, located in more remote locations, involving smaller or even unrated banks, and/or via first-time developers) can and will become the engine of positive social and environmental change in our economy. In 2022, a project reaching financial closing with a very small sending bank in Africa that surprised us.
Mitigate key stakeholder risks to enable long-term financial viability and sustainable value, including positive social and environmental benefits. Such projects often change lives!
Set a high bar for other investors to offer comparable terms. Presently, we have no peers … only China-based investors would finance 100% of similar projects, for which they usually expect a majority stake, or onerous terms, with a reputation for outmaneuvering developers to eventually take control.
Enhance the credit of those who would otherwise not be able to access affordable project finance — especially when they wish to maintain control and/or a controlling equity carried interest. Unlike traditional loan guarantees, that must remain in place until the loan is repaid, we use a financial (completion assurance) guarantee that goes away once the project begins Commercial Operation. This is further explained below. Even if there is more work/expense to reach shovel-ready status, we do not ask for or otherwise expect (or even want) to take control.

Funding Program Features

Financial guarantees enable balanced risk allocation from private-sector project developers to banks (via a Bank Guarantee, Standby Letter of Credit or several other forms), or between the company backing a project and our bank (such as via a bank-endorsed Promissory Note, issued by the project company or a backer), or private investors working in cooperation or partnership with governments (via a Sovereign Guarantee) on projects that benefit the country. Compare and decide which type of guarantee will serve you best here.
Note that a Bank Guarantee or Standby Letter of Credit (BG/SbLC), or bank-endorsed commercial Promissory Note, stays in place during the project pre-construction, construction and commissioning phases, until reaching Commercial Operation Date (COD), to ensure that the project gets completed.
Such capital/loan guarantees are suitable for mid-market project financing and can take the place of project, corporate or sovereign-issued completion bonds. Developers and sponsors may still want to use such insurance, but here the capital can flow (a monthly draw schedule is established) without a loan guarantee, collateral lien, the need for control by the lender/investor, nor several other more traditional project financing requirements.
See Success Tip #5.2 for more about why insurance products are not a suitable alternative to a bank-related financial guarantee.

Program Advantages

What makes this Completion Assurance Program (CAP) unique or at least advantageous? See benefits below.

In3’s capital partners are flexible and adaptable to multiple project types and phases, as well as contractual structures
– Tenors may extend to up to 15-20 years or more
– Capital costs are now based on prime lending rate SONIA plus 2.5% APR, no lien (mezzanine, not senior debt)
– Developers may optionally involve In3 or their Affiliates (joint venture partners) or project technical partners in arranging EPC services, as the owner’s engineer, as a general contractor (responsible for building the project assets, usually delegated to a local construction firm), for operations & maintenance, construction management, or for technical design/engineering services, business planning, deal packaging, pre-vetting (due diligence preparation), putting together datarooms, etc.

Additional risk insurance can be obtained for a variety of hazards, though with a capital/loan guarantee, such insurance may not be required. Examples:

Contractual risk e.g. payment risk, performance risk, etc. — with CAP, the project would be fully funded.
Political, Currency and Regulatory risk e.g. change in law, negation or cancellation of license, tariff adjustments, local currency convertibility, transferability, or expropriation, war and civil disturbance, etc. We do not require such insurance, but you may still want to obtain such coverage.
Performance risk (or volumetric/generation risk) or Completion risk — again, developers may want to ask their EPC/General contractor to cover these hazards, but we do not require such insurance.

Similar to a completion bond, however, our Completion Assurance Program provides a strong incentive to work together in a cooperative manner to make sure the project assets ultimately get finished and commissioned.

How is CAP’s guarantee different?

Traditional loan guarantees enhance the creditworthiness of the developer/borrower while the loan is outstanding — from origination (first draw) until the loan has been repaid in full. With CAP’s financial instrument (either a bank’s letter of guarantee or Standby Letter of Credit, typically) we only ask for it to be operative until project completion; that is, it is allowed to expire once the project reaches Commercial Operation Date (COD) and is ready to begin operations.

This is much shorter and thus sharply different from a traditional loan guarantee that is used for the life of the loan. In3CAP’s financial guarantee serve as completion surety and to filter out malfeasance and fraud. Thus, CAP funding provides direct return-on-investment in time and effort, less guesswork, no initial costs, with any fees charged by a bank or sponsor reimbursed out of invested proceeds, offering streamlined qualification, and once pre-qualified (a “test run” that puts you entirely in the driver’s seat, with no obligations or costs to obtain a binding offer), radically improves funding certainty, enabling easier due diligence preparation, faster closings and more attractive capital terms and conditions.

Further, the completed project assets are unencumbered by Senior Debt liens (we do not use a traditional capital stack) enabling the developer to use their completed assets as collateral for subsequent financing. Credit scores and borrowing power actually go up as additional projects get funded and completed.

Benefits of In3CAP for developers and their stakeholders:

Improvement of the overall credit quality of the investment through the use of a guarantee instrument to mitigate critical risks (just the ones that are particular to our private family office funder, by far less stringent than any institutional investor), thus qualifying the asset owners for better terms, such as either lower interest rates, or keeping a higher percentage of equity ownership, or both
Saves significant money over non-guaranteed loans — mezzanine debt at SONIA + 2.5% annual interest can be well below market rates for similar loans, available for up to 25 years, with up to 3 or 4 years principal deferred (interest only), nonrecourse, with no penalty for early repayment.
Saves significant time/effort/energy shopping for the best terms, only to later discover there’s a catch. Here there is no catch — we disclose everything up front, clearly distinguishing between all the pre-negotiated terms we offer, and what remains to be negotiated, which mostly just the equity split. We hear that we offer the best terms available anywhere for 100% and/or early-stage financing of mid-market projects.
Reduction or elimination of key risk drivers which are beyond the control of private investors — including the most important one, the risk of not being able to raise the capital necessary to finance the project(s).
Immediate project bankability, sustainability, and replicability.

In3 Capital Group is approaching our 30th year, with a solid track record as a provider of financial services and results for our clients. We pride ourselves on telling it “like it is” and full transparency is part of that. Most investors won’t explain their perspective, or offer feedback at all. They’ll either like the proposal or they’ll pass (refuse), out of an abundance of caution.

Will it be worth it?

Explore the answer to that for your situation via this roadmap. We cannot make that call; only you can.

We will affirm that, on the one hand, this funding is not for everyone. Some won’t qualify or need to take advantage of the program’s unique ability to make marginal or even unbankable projects suddenly investible. Not every developer has such constraints, and in those cases, if we cannot provide better terms & conditions (we usually can), so you can take advantage of CAP’s rapid/predictable closings, then we don’t deserve your business.

On the other hand, we might just be the “right people” for your project(s) as equity partners. If you can obtain funding from two different sources at the same basic cost-of-capital, which one should you favor? The one that shares your vision and values. We’re in this for the right reasons, according to our sense of purpose and priorities. Do we have that in common? We can finance almost anything, but sometimes a partnership can rely on strengths others would not share, so our “impact” focus should factor in. More on In3’s investment strategy.

Through mobilization of private financing and mitigation of credit risks for impact projects, CAP supports sustainable economic growth and with scale and volume of completed projects on the rise, may eventually begin to mitigate and then reverse climate change, helping countless people and their families thrive in the face of such adversity.

In other words, this program, through your projects and the positive social and environmental impacts they have, achieves twin goals of poverty reduction, improved health & security, and ecosystem restoration for all.

In3 funding program’s simple, 3-stage CAP process outline.

How to get started and submit a winning proposal for CAP funding

After reading the above link, use our 2-page Pre-qualification Worksheet, then Register your project here

What Makes In3CAP Funding Different?