LOAN PROCESSES

CORPORATE FINANCE

1) As a loan request, borrower provides:

  (a) an Executive Summary (ES) (i.e. generic or borrower's) in English (and any supporting documents that borrower wishes to provide). ES needs to detail the assets available for collateral, values, and annual incomes. Once lender advises of its interest, appraisal reports will be of value. AS AN ALTERNATIVE to start the process, borrower can provide an outline of what he wishes to accomplish, what collateral is available, the market values, annual incomes, etc. 

      (b) lender will advise what additional documentation is needed.

  2) Assuming, lender is interested, lender will issue for borrower's signature a term sheet (TS) and NDA (non-disclosure agreement).

  3) If TS is acceptable to borrower, borrower signs the TS and NDA, and returns to lender to be countersigned. Often  borrower, his CFO, or legal counsel will have questions before and sometimes after the documents are signed.

  4) Default insurance deposit (that includes fees to create the SPV*), borrower posts into escrow in the form of cash or securities, as per agreed in the TS.

  5) Once deposit is received, lender retains the attorney that prepares the final agreement and creates the SPV.

(#5 process can take 4 weeks)

  6) Borrower signs and returns the final agreement to be countersigned.

  7) Bond is created, registered, funded by lender and or investors.

  8) Borrower receives proceeds of loan less insurance premium and other costs by wire transfer to borrower's designated account.


*  SPV/SPE (special purpose vehicle/entity) is a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.


STOCK LOANS

  1) Borrower requests a term sheet (TS) (aka 'loan commitment' or 'loan approval') for a stock loan by providing:

......(a) Stock company/symbol (i.e. ticker or #)?

......(b) Country/exchange traded?

......(c) Loan amount AND # shares available to pledge?

......(d) Shareholder name AND address for term sheet?

......(e) Name of current custodian of shares AND holding bank/broker-dealer?

......(f) Are the shares held in personal name, corporate, or SPV?

......(g) Transfer of title or not?

......(h) Use of the loan proceeds?

  2) If Lender determines loan is viable, Lender provides borrower with a TS for review. TS includes: maximum loan amount allowed, loan-to-value (LTV), interest rate, loan term, payment details, etc.

  3) If TS is acceptable to Borrower, borrower returns:

      (a) signed TS,

      (b) if shareholder is an individual, passport of the shareholder, OR if shareholder is an entity, passport of the CEO, etc, and the certification of formation document.

  4) Lender prepares Loan Agreement (aka Control/Security Agreement) for borrower review.
  5) Agreement is finalized and borrower signs contract electronically.
  7) Loan agreement is submitted to the bank/broker dealer to govern the account.
  8) Lender sends loan proceeds to borrower's bank/broker account.

  6) Shares to secure the loan:

     (a) borrower retains ownership of the stock during the term of the loan UNLESS capital controls of stock country are problematic for lender,

  (b) lender directs borrower to open bank/broker dealer account (other options are available); shares are electronically transferred to new account (or via SWIFT MT542).


BUSINESS LOANS

  1) As a loan request, borrower provides:

      (a) Application for funding, completed/signed

      (b) Last 3 months business credit card statements

      (c) Last 3 months business bank statements UNLESS business does NOT except credit cards, then 6 months bank

           statements are needed

      (d) Government issued photo ID

      (e) Voided business check

  2) Lender responds with a question, another document is needed, or immediately provides a quote that outlines the basic terms of the loan.

  3) If the terms are acceptable to borrower, lender prepares final loan agreement for borrower signature.
  4) Lender funds the loan by wire transfer or EFT to borrower's business bank account.

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