Comparing In3’s flagship CAP Funding to Alternative Funding Options
Although In3CAP is going to work best for the vast majority of project developers seeking advantageous terms & conditions, we appreciate that it is not for everyone.
Situations where In3 CAP is not a fit:
- If you require all the committed funding in a single draw or just a few drawdowns. When building something (whether a retrofit, refurbishment, or “greenfield” new), all the funding is not needed on the first day, and our bankers know this. Financing is not designed for M&A, for example. Talk to your Affiliate about your cash flow requirements and let’s see if we can’t work something out.
- If you are working in a sector, country, or scale outside of our sweet spot: although we can work almost anywhere (only a few US State Department restrictions) and in any sector that doesn’t cause social and/or environmental harm, we do have a minimum scale of $25m in total funding ($15m with a cash surety deposit of 35% or more), so that may require some aggregation on your part.
- Debt only, no equity carry to sell — until 2023, when interest rates really jumped, we offered a mix of equity and debt. Now we offer only equity, where the funds that used to be a loan (at SONIA + 2.5% APR) no longer incur any interest expenses. Think of this as a zero interest loan alongside whatever equity split you negotiate. But if you only want a loan without any equity, that’s a problem, as the project then becomes essentially philanthropic.
Any of those are not a fit with CAP funding — we offer monthly draws of minority equity that fit within our sweet spot.
Or from the opposite perspective, here are 7 conditions where CAP funding is likely your best option in the current marketplace.
We like to bring our expertise into situations that help expedite funding by solving our client’s concerns or problems with obtaining funding elsewhere. See the In3 Security Solution Center for more on this or let us know how you propose that we work together.
Here is a synopsis of In3’s alternative offer for funding mid-market projects — Comparing CAP and the known solutions we have available to other options in the current marketplace:
- Attempt to solve the issue or obstacle to In3 CAP funding
- Hire In3 to properly review the file, highly strengths, capture known issues, and propose the topic few funders in our network that would like the proposal. See In3 Customer Service options
- Adjust the proposal to make it more appealing to known sources.
There are very few country, sector, or size restrictions (above the minimums, while avoiding sectors we do not consider part of our wheelhouse), but to obtain a binding offer for any program except CAP funding requires a fee from the developer ahead of closing. The amount varies from $5,000 for a proper review of the current file to $25,000+ for an audit and Done For You (DFY) service, including introduction to lenders or equity investors more suited to your situation.
By contrast, CAP funding’s 3 DIY offers are without initial costs, so long as the client facilitates some form of Security as Completion Assurance (a short-term form of “skin-in-the-game” that effectively screens out fraud), leveraged 1x-3x. That means minimum ~33% if a cash deposit, about 50% if secured with a Standby Letter of Credit (SbLC) or other bank-involved instruments, but ideally as much as 70% SbLC coverage, until project completion (Commercial Operation Date or COD), or closer to 100% if direct Securities or a Sovereign Guarantee (SG). Better terms and faster draws result from increased coverage.
The trouble with direct loans in the current economy: interest rates are outrageously high – 11%-16% or more for commercial loans, and the chances of gaining common ground on risk/reward is slim to none. We can help you “test the waters” more easily, to mutual advantage, showing basic feasibility without getting too deeply entrenched in the narrow pursuit of funding that may or may not exist for your deal.
Our offer of CAP’s private equity joint venture financing includes a “pre-qualification” step and quite clear conditions to evaluate and, with proper support, can be arranged without the lengthy due diligence process that can be expensive and frustrating … traditional lenders don’t know in advance if the credit quality is sufficient, let alone how to assess other risks (management team, execution, commercial, etc.), which often amounts to time wasted — lender and project developer wheel-spinning.
Instead, we have nearly a decade of experience with CAP funding that can benefit diverse developers and projects at any reasonable stage of readiness.
For example, $100M Standby Letter of Credit (SbLC’s are backed by assets or a strong balance sheet) enables streamlined due diligence — we do not care if a project is “shovel ready” — for total funding of $120M to as much as 3x, $300M. Ideally at least 50% SbLC coverage above $40M in total funding, structured as minority equity, no loan or interest costs. More about Security leverage. Getting started with CAP funding.
To date, clients have had the most success with CAP equity investments because interest rates have gone much higher due to inflation, a trend that is likely to continue.
We welcome your feedback and suggestions!
Contact:
In3 Customer Relations
+1.831-761-0700
* The above is for informational and educational purposes only and is subject to change. It is not intended for the buying, selling or trading of securities, or the offering of counsel or advice with respect to any such activities. All due diligence is the responsibility of the Buyer and Seller. This website and any related documents are never to be considered a solicitation for any purpose in any form or content.