The SBLOC is no longer needed.  In fact the program as changed drastically and in most cases for the better.  So what are the changes?

1. In place of the SBLOC, a CD equal to 10% of the loan amount needs to be created.  The borrowers retain ownership of the CD, but the CD is securitized to obtain the bond financing.
2. The loan is Non-Recourse.
3. Zero Equity Interest in the Project.
4. The loan is amortized over 30 years after the construction period.
5. The rate during the permanent financing could be as low as 3%.

If your wanting to get your project up and off the ground, this project just might be your answer.  Call us today to get your application package started.  Funding can be as fast as 60 days from acceptance.

Here is how this program works:

The Trust portion of the transaction requires two main aspects before it will even begin: 1) a minimum loan amount of $25,000,000 ($25 million) and 2) a stand-by letter of credit (SBLOC) equal to 20% of the borrowed amount.  Once the Trust has received the SBLOC, it will establish Bonds and obtain a Senior Life Settlements Insurance (SLS) to enhance the Bonds.  With the SLS, Moody’s will rate these Bonds as an “A” or “AA.”  This makes the Bonds more desirable on the market because they are backed by the insurance.

The time frame from receipt of the SBLOC to the Bond Sale is approximately 90 days.  During this time, most ,if not all, of the Bonds are already pre-sold.  It is at this 90 day mark that the first draw of funds is made.  This makes it perfect for Construction and Development project because not all of the money is needed up front.  Following a pre-approved draw schedule, the Trust will then fund the remainder of the project.

Funds from the Bond Sale will be deposited, where it will remain for the 36 month term, allowing the Trust to use the money to create profits.  During this 36 month term, construction is done without interest paid or even accrues.  At the end of the 36 months, the Trust has a Right of First Refusal on the Permanent Financing.  The Trust’s terms on the Permanent Financing are: 1) Interest rate is based on the Wall Street Prime Rate + 2% (currently this would yield a rate at 5.25%) 2) Term is amortized over 20 years and 3) locked in at the end of 36 months.  If the project is sold at month 36, the payoff to the Trust would be the money advanced for the construction with no additional fees.

Exit strategies for this type of financing include:

• Sell
• Permanent Financing from the Trust
• Permanent Financing from other lender/bank
• Pledge the SBLOC to the Trust in order to Debt Service the loan
• Establish a new Bond for Profit Sharing to Debt Service the loan

Should this financing be the answer to getting your project up and off the ground, call us today to get the process moving forward.  Or simply apply now, by click on the “Apply Now” banner and complete the short form application.

We look forward to helping you bring your visions to reality, as you build your project from the ground up and beyond.