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Minority Owned Business Received Project Financing

Challenge Faced:  

How a minority owned business service provider (“MOSP”) financed an unbudgeted critical service need for a Major Canadian Corporation (“MCC”) disqualified by MOSP’s bank, without using any mezzanine or venture capital.

Minority owned service provider {“MOSP”} is currently experiencing 90-120 day delays in payments from major customer. “MOSP” banker has disallowed further advances on their receivables.   “MCC” is now in need of crisis assistance in a multi-year project, which has no budget. MOSP has a 10 year working relationship with “MCC”, but simply cannot finance the project without losing control from selling part of his company to mezzanine or venture capital firms. MOSP was afraid the investors ownership in company will cost them their “minority-owned” certification and losing most of the profit to interest expense.  

     
Opportunity Discovered:

 

Great backlog and relationship building opportunity for major customer in need of a two year project requiring hiring 75 new employees.  MOSP proposes a three (3) year $13.5 million contract to “MCC”, with one single, guaranteed payment until the 36th month.
 
$10 million (100% financing), single guaranteed payment 36 months from the funding date and 12 months after scheduled completion.    
 
Benefits:  
  • 100% project costs and MOSP profit provided on day one. 
  • “MCC” had three years to budget for project, and saved 30% a year in project cost because MOSP avoiding the additional expense and disruption of outside investors.
  • Lender received no equity stake of any type, but provided all mezzanine and venture capital. Lender did not charge any points, fees nor lender closing costs. All $10 million was disbursed to the project at closing.
  • No personal guarantees by management or ownership.
  • All purchased project equipment and real estate assets are available for traditional bank collateral financing.
Please note: We respect the confidentiality of our clients’ transactions. The purpose of this example is to illustrate the unique features and benefits of our financing structures. Key details are not disclosed or may be changed to protect confidentiality. Every university will be different, but payments will be structured so that the university will receive an infinite return on payment from energy savings, as long as an acceptable investment grade guarantee and “waiver of appropriations risk” has been delivered.

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