| Program 1 Private Family Office Equity Funding | Program 2 2A: private lenders 2B: private portal | Program 7 Private Loans | Notes and resources | |
| Type of funding (asset classes) | Project Equity, a split between mezzanine debt and equity carried interest, up to 100% of funding | Project Senior Debt but some lenders expect a certain minimum owner equity (“skin” in it) | Project or Venture Debt | P1 and 2AB are for project finance only; P7 works for M&A, roll-ups, and refinancing as well as project funding and business or venture lines of credit |
| Minimum per deal or portfolio | $25 million | $50 million; $100m strongly preferred | $25 million | All prefer $50m-$1B |
| Time to funds | ~30-60 days max from pre-qualification | ~60 days | ~60 days | CAP has a pre-qualification process that takes out most of the guesswork |
| Sample Interest Rate (subject to change) | ~7% (SONIA + 2.5%) | 7’s up to 8% APR | 5s & 6s percent APR | Lower rates with a minimal profit share (not defined yet) |
| Loan Tenor | Up to 25 years | Up to 20 years | 10 years; up to 20 if warranted | |
| Grace Period | Up to 5 years | Up to 5 years | 2-3 years for development projects, up to 5 if warranted | |
| Upfront fees | None | P2A: $25,000 vetting then $75,000 (held in escrow) upon acceptance and issuance of LOI for a binding term sheet P2B: $50,000, of which $35,000 is for thorough vetting and risk evaluation* | None if client is prepared | * To list on P2B’s well-populated platform takes a dedicated team of analysts considerable focused time, and usually costs $40,000. When starting with In3’s vetting and fundraising advisory, typically one-time $25,000, established clients can be listed on the P2B platform at a discount. $5k is due to In3 or the referring party, so we would credit that amount for established client when a pivot to P2B is deemed necessary. |
| Draw timing | Monthly, as close to even as possible | Quarterly via 2 or more draws | Quarterly, but can be lump sum, or monthly, or as needed | |
| Closing fees | 1-4% one-time from first draw | P2A: 2-3% paid from proceeds P2B: 3-4.25% paid from first draw (In3 gives up 75% of standard 3% so add 1-1.25% additional) | 3-4% with 2 points allocated to this partner (will need to work this out on a case-by-case basis). | Depends on scope-of-work of vetting, due diligence and deal size. In3 only receives ~25% of the fees charged to the client for P2B or P7. |
| Deposit | None, but a Completion Assurance instrument guarantees the project(s) will reach commercial operations, then it is allowed to expire and is removed. More | None, but may require $10,000 additional fee for a comprehensive insurance wrap paid to this UK broker | Security deposit of 20% but borrower still receives 5X the amount of deposit* | * With cash, P7 borrowers only repay 80%. If not cash, a 20% face value bank instrument (Standby LC or BG), or tax credits (TBD), TIF (tax increment) notes, treasuries, bonds, sovereign guarantees, etc. |
| Currency | Any local currency, but guarantee must be in US$ or Euros. | US$ only | US$, but other currencies may also be acceptable. | |
| Debt Service Coverage | Not used | P2A: 1.25 average DSCR* or better | TBD | * Debt Service Coverage Ratio (DSCR) similar to Cash Available for Debt Service (CADS) |
| Location / Political Risk | Global reach | Global reach | Global reach | Just not N. Korea, Russia, or other countries with US sanctions |
| Business Risk | Close to zero | Close to zero | Ask for details | Requires creditworthy offtaker(s) or other proven demand at verifiable market rates; if unclear, a third party feasibility study helps make the case of nominal commercial risk |
| Credit Risk | Adequately offset (enhanced) by Completion Assurance Guarantee | While P2A uses credit insurance during construction, P2B may request a wrap | 20% deposit serves as loan guarantee (if non-cash) or as a cash security deposit until funding (repay only 80%)* | |
| Execution Risk | Not a factor | P2A or B requires highly experienced teams | Ask for details | Prefer experienced teams; there will be background checks / KYC |
| Technology Risk | Not a factor | P2B may request a performance bond | Ask for details | |
| Insurance | Not required | May be requested at $10,000 initial cost; the cost of the insurance premium (1-2%) can be taken out of proceeds | An insurance policy is taken out to protect the client’s 20% and dissolves once they are fully funded | FYI, Program 7 is thus the same as Program 2 |
| Due Diligence | Streamlined; 2-3 weeks at most | P2A: 2-3 weeks; P2B: Allow 90 days; but could be less | Streamlined; 2-3 weeks at most | If all goes well, leads to binding offer either as binding term sheet or actual contracts (loan agreement). |
| Qualification | * In3’s sector focus (more) * New construction, refurbishments, retrofits, expansions * Unlevered IRRs above ~4.5% | * In3’s sector focus (more) * New construction, refurbishments, retrofits, expansions * P2A: Unlevered IRRs above ~11%; P2B: ask for details on a case-by-case basis | * In3’s sector focus (more) * New construction, refurbishments, retrofits, expansions, M&A or growth * IRRs (unlevered) of ~6% or higher due to maximum 20 year loan term | Similar to Program 5, P7 is less concerned about profitability metrics so long as there is adequate evidence (bordering on proof) that the business/commercial and market risk is close to nil. |
| To start | Apply here then download and send In3 a draft of a proposed Completion Assurance Guarantee of at least 30% | In3 submits preliminary materials (DONE) then an onboarding process | Propose the form of 20% deposit (cash or asset-backed instrument) then upon acceptance will request proof as part of intake; more | Apply here |
Consider CAP funding (Program 1) if any of these conditions apply (based on 4 problems CAP funding solves):
- Developer/owner building first project of the current type, scale or location, or developer happens to have limited sector experience
- Developer/owner is out of cash (but ideally has assets available to secure a guarantee), seeking 100% funding without initial fees
- Nominal project investment to date — prior “skin the game” plus new money available to fund (owner equity) is below ~10%, though this standard varies by industry and geography
- Project is a relatively early stage — not 100% “shovel ready” — and needs funds to finish development or other costs before the start of construction
- Project located in a country with high political risk, whether or not risk insurance is available.
- Modest financial returns — typically below 12% unlevered IRR
- Project has technology risk or other risks traditional financing would not accept
- Project is in a country that can issue a Sovereign Guarantee (SG) but either
- the SG face value is at least 20% but less than the amount of total funding, or
- the SG is from a ministry other than the Ministry of Finance
- the SG is from a country that uses petroleum reserves to back the instrument
- the SG cannot be confirmed by a legitimate commercial bank (warning: then how do you know it is real?)
- Note that if client can obtain US government Treasuries, Bonds, TIF notes, tax credits or cash, but any of the above circumstances apply, Program 7 may work. See below
- However, if above 30% coverage, a BG/SbLC/SG or AvPN can be used for CAP funding with advantageous due diligence, little concern about certain risk that lenders generally won’t accept, without a lien or UCC-1 filing on the operating assets. CAP funding disregards the stage of readiness (anything reasonably beyond the idea stage is fine), execution risk due to management teams having limited industry experience, technology risk, political risk, among others. We just won’t accept the majority of completion risk.
- Seeking to obtain funding in a local currency other than US$ or Euros
Consider Program 7 if ANY of these conditions apply:
- If the available CAP instrument is less than 30% coverage but at least 20% of the total funding request. Sometimes CAP funding can still be used if the instrument and funding is delivered in 2-3 tranches.
- If the client seeks a large initial drawdown or lump sum distribution of proceeds, such is common for Mergers (rollups), Acquisitions (takeovers), and Refinancing of higher-APR loans. In other words, if there is no new construction involved, and a lump-sum distribution is required, then P7 would be the better option; otherwise, stick with CAP funding or Program 2, or both in combination.
- The client prefers to not have an equity partner — does not want to sell any equity — but will be able to repay the amortized loan amount at the offered interest rate from standalone operations.
- The client is okay with tying up 20% loan value for the life of the loan (if they’re not, they must use cash for the 20% of Program 7A)
- Client is working in a country that can issue a Sovereign Guarantee (SG) but either
- the SG face value is at least 20% but less than the amount of total funding, or
- the SG is from a ministry other than the Ministry of Finance
- the SG is from a country that uses petroleum reserves to back the instrument
- the SG cannot be confirmed by a legitimate commercial bank (warning: then how do you know it is real?)
- Note that if client can obtain US government Treasuries, Bonds, or TIF notes or cash, but any of the above circumstances apply, Program 7 may work.
- However, if above 30% coverage, a BG/SbLC/SG or AvPN can be used for CAP funding with advantageous due diligence, little concern about certain risk that lenders generally won’t accept, without a lien or UCC-1 filing on the operating assets. CAP funding disregards the stage of readiness (anything reasonably beyond the idea stage is fine), execution risk due to management teams having limited industry experience, technology risk, political risk, among others. We just won’t accept the majority of completion risk.