Our Project Financing Program provides up to 100% debt financing for growth-stage companies as well as large-scale alternative energy and commercial real estate projects. We are unique in that our loans are backed by client-provided financial collaterals, i.e., Sovereign Guarantees (SGs), Standby Letters of Credit (SBLCs) or Bank Guarantees (BGs), rather than physical assets such as real estate.
Program Requirements
We will consider commercially viable projects in virtually any geographic area throughout the world including North and South America, the Caribbean, Western/Eastern Europe, Australia/New Zealand, Southeast Asian (ASEAN) countries, China, India, Africa and the Middle East. The minimum loan size is $10 million, interest only, with a repayment period of up to ten years. In many cases, the interest can be rolled into the loan with the borrower making only a single balloon payment at maturity.
Financial Guarantee
The key to our program is the client’s ability to provide a financial guarantee. If the client is unable to provide a traditional financial collateral such as a SG/SBLC/BG, we can assist them in reformulating other assets such as company stock, hard assets, offtake agreements, etc., to act as a financial guarantee. Once the guarantee has been accepted by our loan trustee, typically Citigroup, N.A., our time to funding is approximately 90 – 120 days.
Program Benefits
- 100% project financing potential for borrower;
- Allows borrower to raise patient capital without sacrificing equity;
- The loan proceeds can be used as debt or equity capital, investor buy-outs, down payments, re-financings, etc.;
- Ability to obtain financing quickly—usually in 90 – 120 days, or less;
- No restrictions on use of capital as long as used for prescribed purposes.
Our Process
- Gideon and Borrower sign loan documents.
- Borrower obtains financial guarantee–Standby Letter of Credit (SBLC) or Bank Guarantee (BG)–as collateral, from their bank or Investment Partner*.
- Borrower’s bank issues SBLC/BG to Gideon’s bank as Beneficiary. Under certain circumstances the SBLC/BG might need to be advised/confirmed by an intermediary bank.
- We draw down on our liquidity with our bank based upon: i) viability of the Borrower’s project or company; ii) size and strength of the bank issuing the SBLC/BG; iii) the financing agreement between Gideon and Borrower.
- We disburse the loan to Borrower after deducting: i) interest reserve; ii) issuing costs; iii) fees.
- Upon maturity, typically one year, Borrower repays the loan, or requests a one-year loan extension, which would require paying bank interest and fees for an additional year.
- Upon loan repayment we restore our liquidity with the bank and the SBLC/BG is released.
- If Borrower fails to repay the loan, we instruct our bank to call upon the instrument.
- Borrower’s bank will pay the claim upon the SBLC/BG and foreclose Borrower’s collateral used to secure the instrument.
*The Investment Partner: A third-party–such as a supplier, EPC Contractor or financial investor–can issue the SBLC/BG on behalf of the Borrower, which would likely require providing the Investment Partner with an equity stake in the project. The advantage to the Investment Partner is that they are providing a financial guarantee, rather than a direct cash investment.