Prospective borrowers are required to complete our company profile and submit it to us for review. Based on the completed profile, we will determine if the loan has a reasonable chance for approval. If so, we will have interviews with management to gather additional information on the company and its business. This process generally takes 3 business days.
Assuming both parties desire to continue discussions on a possible loan, we will provide an engagement letter outlining the proposed loan terms, required due diligence and all conditions to closing. Upon signing of the engagement letter, a diligence fee will be charged and we will commence our formal due diligence process. It will take approximately 5 business days to complete our diligence process upon receipt of the requested diligence information. Diligence information will include, amongst other items, two years of business and personal tax returns, financial statements of the business for the past two years, disclosure of existing debt, copies of existing liens, mortgages and notes, third party appraisals, list of principals and personal financial statements, etc.
Assuming the successful completion of initial due diligence, the file will be sent to Committee to gain approval to issue a Term Sheet. The Term Sheet outlines the final conditions and necessary due diligence for a commitment letter to issue. Typically a Term Sheet is issued within 10 business days after submission. Once the Term Sheet is executed by the borrower and the fee (refundable) for the Term Sheet is paid, then final due diligence will commence so a Commitment Letter can issue.
Upon completion of due diligence to our satisfaction, we will issue a commitment letter setting forth the final terms and conditions of our loan together with all fees and expenses to be paid by the borrower. Upon signing of the commitment letter, we will require a commitment fee to be paid. Once we receive the commitment fee, the preparation of legal documentation will begin. This process can take up to 10 business days to complete.
Upon completion of legal documentation and satisfaction of all closing conditions, the loan will be funded.
Our loans will generally be short-term in nature, averaging between six months to 18 months. The loans will typically provide for a fixed interest rate payable monthly with a balloon payment of principal and accrued and unpaid interest at maturity and contain prepayment penalties. Although market conditions may vary, we typically charge interest on our loans at annual rates of up to 16% based on current market conditions.
Loans will typically range from between $100,000 to $1,000,000, although we can vary from these thresholds in certain opportunistic situations. We expect that our capital will primarily be used by companies to finance working capital and organic growth.
The loans will typically be secured by a first and/or second lien on all existing and future assets of the borrower, the personal guarantees of one or more of your company’s principals, and a first and/or second lien on the personal assets of your company’s principals including, without limitation, primary or secondary residences, other real estate, life insurance policies, securities and brokerage accounts