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Collateral Enhancement

CD Secured Loan - No payments!
Borrow $400,000+

Many potential transactions are impossible to complete because of a shortfall in lendable collateral value. In these instances, collateral enhancement programs may be a viable option.

Excellent Credit Scores Required!

  • Personal Credit scores 720+ all 3 credit agencies
  • 5+ tradelines on personal credit report
  • Credit history 5+ years old
  • No Late Payments - No Bankruptcy
  • USA Citizen or US Green Card Resident

HOW IT WORKS

Successful implementation of the program requires five parties: The Borrower, a Commercial Lender, Hedge Fund (Guarantor), brokerage firm, and a Depositor (Trust). Excellent credit report with high scores is very important to get the lowest loan rates. Anything below 720 will not be accepted.

The Depositor(Trust), for a fee, provides funds to purchase 5 year zero-coupon CDs at deep discount. These CDs are used as collateral to secure financing from Commercial Lender. The borrower obtains interest only fixed-rate funding over a 5-year term.

The CD guarantees the principal of the loan so the Borrower may not have to pledge assets to secure the loan. The Borrower may be required to pledge sources of cash flow to guarantee the payments on the interest only loan. The hedge fund will sign as guarantor on the loan and 10% to 20% of the loan will be deposited into an investment account.

The principal amount of the CD fully secures the Commercial Lender for the loan principal.

The hedge fund (guarantor) for a fee will manage the investment account that will cover loan interest payments. Hedge fund is paid 18% performance fee.

Borrower has immediate funds for any purpose.

Deal Structure:
- Trust purchases $10 Million in zero-coupon CDs at discount for $7.5M-$8M.
- $10 Million Loan 3% interest only 5 year term secured against the CDs
- $8 Million deposit + fees paid back to the Trust
- $1.5 Million deposit into investment account to manage $300,000 annual interest payments
- $100,000 commission fees
- 4% ($400,000) funds to the borrower for any use

Requirements:
- Excellent credit 720+ scores
- $1 Million net worth but JV agreement with the Trust will provide the necessary net worth requirement by the lender
- If borrower has strong cash flow he/she may opt out of using hedge fund as the guarantor on the loan and keep the $1.5 Million
- Set-up fee 0.2% or $20,000 of total loan amount due upfront (Based on loan $10 Million)

Set-up fee is refundable if borrower doesn't receive agreed financing. Set-up fee is not refundable if borrower withdraws during the loan process. Funds are used to acquire an aged LLC 2+ years old, add 5 business tradelines and create JV agreement.

The entire process takes about 4 months. First 2 months to acquire aged LLC and establish business credit history. Then the borrower is added to the LLC and JV agreement is signed with the Trust (Depositor for CD purchases).

*Borrower must maintain excellent credit scores during those 4 months. Do not apply for any loans during this time.


Q. How do I get this financing?
A. In the Ultimate Credit Line we teach you how to get CD secured loans or deposit secured loans. Usually those loans match 100% of your deposit or CD. So if you deposit $100,000 you can get $100,000 loan. The only difference in this deal is that long term zero-coupon CDs or zero-coupon bonds are used to secure the loan. You can purchase zero-coupon CDs at the bank if you ask for it. The rates on zero-coupon CDs are much higher but you have to wait until end of the term to get your interest and principal back. Lender lends money that is secured against CDs. Borrower must have excellent credits scores to qualify for low interest rates. Historic low interest rates make it possible to structure low interest loans which can be easily managed by investing 10% to 20% of loan amount with a fund manager.
High yield Zero-coupon CDs: You give the banks $7 Million and they promise to pay you back $10 Million.
Then you ask the lender to lend you $10 Million against the $10 Million CDs.

Q. What happens if I can't pay the interest? Will it affect my personal credit history?
A. The borrower will be the LLC and not you as an individual. If you default on the loan for any reason it will not affect your personal credit scores but it will affect the business credit score and business credit report.

Q. What if I don't want the Hedge fund to manage my payments? I can manage the 3% interest rate on $10 Million loan.
A. After the depositor is paid back you are left with about 20% of the total loan amount. So in this case you would receive $2,000,000 and you will have to make $300,000 annual interest payments. That is about 15% interest on $2,000,000. So you will have to provide some paper proof that you will be able to make the payments over a 5 year term.

There is a waiting list for this program. If you want to get on the list contact us for more info.