144a bond funding is a fast, low cost, non-recourse method to finance many different types of Real estate and non- real estate projects. The 144a bond program is exclusive to USA projects. The international equivalent to these projects is called ‘the Bond Program’. The 144a rule is a 1990 SEC rule which facilitates the resale of private placed securities without SEC registration. This rule was designed to develop a more fluid and efficient market for unregistered companies. It has become an increasingly popular way to fund large projects in all industries.
Benefits of 144a bond financing
The bond funding program offers its investors the following benefits:
- 100% LTV
- No personal guarantee
- No credit checks
- No personal asset verification
- No loss of equity in your business
- Quick turnaround time- around 90 days
- Low underwriting fee
- No lender fees upfront- payable at the time of funding
- Flexible payment terms
Who benefits from the 144a bond funding program?
The 144a bond fund program funds projects between $10 million- $500 million in the following areas:
- Stabilized Commercial Real Estate
- Construction Real Estate
- Rehabilitation Real Estate
- Mines and Refineries
- Oil, gas and other energy projects
- Energy projects: Solar and Wind
- Material handling and Warehousing
- Logistics and Cargo
- Communications, Technology, and Data Technology
- Non- Real Estate projects: technology, large business acquisition and/ or expansion, includingpharmaceuticals, dental, vetinary, ophthalmology and all other kinds of surgical practice projects.
Pre-requisites and how to obtain 144a Bond funding
Here is a step- by- step process on obtaining Bond Funding:
- Briefly describe the nature of the project, and its location. (An executive summary)
- Resumes are required on all investors
- How much capital has each investor invested into this project? And how have those specific funds been allocated?
- How much are the investors looking to borrow?
- What is the total amount in equity the investors will be contributing?
- What other assets will the investors are contributing to the project?
- Are the investors the ones with the deed to the property?
- Do the investors have all the necessary entitlements?
- What is the specific breakdown of all the funds being sought out?
- Future projections should be provided — showing the anticipated revenue and the net income of the project over a three year period.
- Current financial statements are required from the investors.
- An exit strategy should be discussed and included.