The 4 Terms
1. 14% Interest rate per year.
A. This is a pro-rated rate.
If your loan only extended 6 months, you would then only pay 7%
2. 5% Origination fee
A. This is due at close
B. Both the 14% and the 5% can be taken out of the loan proceeds.
3. Loan Review Fee/ Appraisal Fee
A. These are wrapped up into 1 fee ranging on average from 100k-150k
(If the lender has to appraise a gold mine with “in-ground assets” it could be from 150k - 200k+)
B. They always have this fee on every deal they do, because everything must be appraised and reviewed.
C. The reason for this is because the lender does not lend solely on people’s credit score, or if they have had a bankruptcy. The lender is more interested about the asset or the project.
D. THESE FEES ARE NOT UP FRONT!!! But the fees must be paid to the lender before the loan is funded.
E. They first have to make sure you qualify for a loan with them (only 2% of everyone that asks for a loan will even get to this stage). After you qualify, you must receive an LOI (Letter Of Intent) from the lender. This is NOT an LOC (Letter Of Commitment). A Letter Of Intent – Tells you what we intend to do. Then they give you references of people that you may check up on them. After this when you feel comfortable, it is then you pay the “Loan Review Fee” to the lender.
A. This is on Gold, Diamonds, Real-estate, or anything you have.
B. They MUST have 50% collateral on almost every project the lender does a loan for.
C. They will do 95% on an SBLC or a BG.
But almost everything else 50%LTV
If you give the lender $10Million in assets they can give you a $5Million Loan.
All loans last for 1 year and are written up for that. But if your 14% is paid up for the year, then after a review there can be an extension to the next year. And so on every year after, for as long as you need it and the board approves it. You can have it for 50years or 100years if you want.