Warehouse Facilities For Lenders & Businesses

Warehouse facilities, vary in price subject to lender experience, the product type, underling asset class, seniority of the warehouse facility and the borrower risk.

Rates can be as low as 6.5% p.a., up to 18% p.a. for second mortgage warehouse capital.

For your next private warehouse facility, contact us here.

All our lender warehouse facilities are either for new or existing lenders or businesses who wish to create a lending product. To qualify for a facility you must meet the follwing criteria.

1. You must have a loan book size for at least $2M for lenders, and $500k for businesses wishing to create a lending product.

2. You have strong recourse and legal agreement with each borrower.

3. You have an exit strategy to repay the loan (refinance, sale of asset, business venture).

5. You can service the interest cost or pay it in advance out of the loan amount.

For your next private corporate lender warehouse facility, contact us here.

A financial warehouse is where a wholesale investor (family office, bank, investment bank, specialised investment fund) provides a line of credit to a lending company. Think of it as a lender-to-lender facility.

For the provision of this line of credit, the wholesale investor takes the lenders loan book and the underlying security of the loan book as security for the facility being provided. These facilities can be tied to existing loan books, or to new loan books.

The lender taking the funds can be a bank, a non-bank lender or private lender.

Key benefits for the provider of the warehouse facility are:

• They do not have to engage in individual loans.
• They do not need to manage individual loans
• They do not need to originate loans.
• They do not need to manage the default process.
• They do not have high deal concentration risk, as their capital is spread across multiple deals.
• They can gain an alpha return.
• The role of the warehouse provider is to ensure the lending criteria of the warehouse facility is met by the lender.

For your next warehouse facility, contact us here.

The capital of the warehouse facility can be secured in several ways.

1. It can be the senior lender, with its own loan book.
2. It can be second ranked, in other words its capital ranks behind other capital in the capital stack of the lender originating the loans.
3. Warehouse facilities can even take the assets of an existing loan book as security, which improves the overall total security pool for the warehouse provider.
4. First loss provisions can be structured, so the originating lender puts their capital at risk first on each deal before the warehouse loses any of its capital.

For your next warehouse facility, contact us here.

Private corporate debt lenders (PCD) have far less restrictions and prerequisites when compared with traditional bank funding. Because private corporate debt lenders are willing to take on more risk than a bank and are willing to do transactions that banks won't do, PCD is priced higher than commercial bank loans. Typically the delta is 3% to 4% between what a bank rate would be, and what a PCD rate would be.

Where for example a bank might require two years of trading history, a private corporate debt lender can accept only 1 year.

Where a bank would look at historical performance of the business only, with very little appreciation of future growth. Private corporate debt lenders look at how capital will be deployed and the future cash inflows from such activities.

Where a bank would apply a strict P&I repayment ratio, or debt coverage ratio. Private corporate debt lenders can offer higher lending ratios, and or interest only repayments.

For your next private corporate debt facility, contact us here.