Cash Surety streamlines CAP funding pre-qualification

When short-term cash can be used for long-term CAP funding, this approach to Security (what we call a “surety deposit”) is least complicated and most leveraged.

Roughly 25-35% of total funding is recommended. The larger the deposit, the more bargaining power with In3 underwriting to negotiate favorable terms, mainly the equity split and drawdown period.

Cash can come from any diverse sources including, for example, available tax credits (production or investment), carbon credits, or other “monetizable” instruments, sale of an asset, short-term use of non-cash assets or other financial depth to secure a bridge loan or Line of Credit ….

The cash is held in a segregated Custodial Account in the name of your project’s Special Purpose Vehicle (SPV) and cannot be used for any other purpose. It sits there until the final drawdown of funding from our bank and is then released.

If you lack access to cash capital resources, check with those who know your business, or who know you, and have sufficient “dry powder” to gain liquidity (whatever rate of interest or other incentive(s) you care to offer) and listen for their terms and conditions, emphasizing that this structure, although not widely used by other investors, is quite safe.

We typically look for annual percentage yields (APY) for such loans based on whatever the project can afford; keep in mind that it will be for a relatively short period — interest only (paid out of invested proceeds) then returned in lump sum on the final drawdown of project capital.

Some lenders or guarantor fund managers might not be comfortable moving cash, in which case using an alternative instrument such as bank-involved Standby Letter of Credit (SbLC) probably makes more sense for that person. SbLCs are the next most popular form of Security right after a cash surety deposit; compare these two.