What is CAP funding “security” and how does it work?
CAP funding can be arranged for any new construction project in our sweet spot, $25 million or more ($50M preferred). To gain CAP funding’s advantages, clients are asked to facilitate a form of security that assures project delivery — usually a cash deposit (25% or more) or a bank-involved Standby Letter of Credit (SbLC). Compare these two.
There are additional options, depending on your location, access to non-cash assets, bridge loans, or sponsors, and/or if your banker knows you are creditworthy.
Know more about “Completion Assurance” Guarantees (CAGs) an asset-backed financial instruments.
Check out these Practical tips for sourcing CAP Guarantees Or CAP funding’s Frequently Asked Questions
Still unclear? Request assistance from In3’s team or your In3 Affiliate?
About CAP funding: CAP’s 100% funding without a loan to repay, within reach at any reasonable stage of readiness is probably unique in the capital marketplace. It is the only project funding that uses security just until all the funding is received (in the case of a cash deposit), or until the project is delivered (for CAGs). “Delivery” occurs once construction is complete and the project is commissioned to begin commercial operations. That milestone is called Commercial Operation Date (COD), when annual CAGs are then allowed to expire on their “maturity date” and fall away.
If you opt to use a cash deposit, it is returned in lump sum on the final drawdown of funds, and can then be re-purposed for more project funding or other uses as you wish.
That’s it! Questions? | Indicative Term & Conditions | In3 Guide to Bank-involved CAGs
Everyone keeps their eyes on the prize of a completed project. Projects then begin to generate cash flows for the equity partners to repay the investment. The exact equity split is subject to negotiation, depending mainly on how much the cash or CAG gets leveraged — which can be as much as 3-4x.
How to get started | Register your project once ready for In3 vetting