Equity Participation Loan

 
As an alternative to standard construction finance where funds are advanced by a prime lender or in combination with junior debt (also called mezzanine funding) Moshav Private Funding offers its Equity Participation loan, which is based on the proven  model where the equity participant shares in risk and profits. In most cases prime funding (up to 65% of end project value) will be obtained from a prime lender, with the balance provided by the Equity Partner (the lender so to speak).

Funding is provided for up to 100% of hard and soft costs and interest is capitalised for the duration of the loan. The developer and builder must satisfy the equity partner of theire experience in developing and or building similar projects. Assets must be verified. Taxation returns are not required but assessment notices may be required to evidence compliance.
Land costs together with other approved expenses can be reimbursed on settlement.


Features

  • Residential, commercial or mixed use projects are acceptable
  • Draw down are made in line with Building contract and prime lender
  • $500,000 (minimum) to $2 million (maximum) loan amounts available
  • Equity Partner takes between 25% to 50% of profits (being end value GRV less total costs)

 

Fees

  • Application fee of 0.25% of the amount required (minimum $2,500.00)
  • Acceptance fee of 0.25% of the amount required
  • Valuation fees and legal fees are treated as project costs and paid by the project
  • Establishment fees between 1% to 3% depending on the development margin (which must exceed 25.00% to be considered viable)

 

Requirements

  1. Developers Feasibility study displaying project viability, financial forecasts and cash flows
  2. Developers / Builders history
  3. Building and town planning permits
  4. Stamped plans
  5. Fixed price building contracts
  6. Evidence of pre sales


* Usually equates to 80% of end value depending on the development margin which must exceed 25.00% to be considered viable for equity participations.