Credit Enhancements are very similar to an SBA loan or even the process of cosigning a loan – such as a parent may cosign for a child’s first car or home. Temporary Factors – that make an enhancement particularly timely
- Bank Underwriting tougher due to regulations and Fed requirements
- Current Credit Crunch due to subprime crisis and other related mini-bubbles
- Your balance sheet, debt-to-equity ratio, or credit score has adjusted recently which make traditional sources uncomfortable with the proposed loan
Permanent Factors – there are often risks to principals in commercial real estate projects
- In some cases the painful alternatives to obtaining an enhancement include:
- Avoid total loss of earnest money or investment!
- Higher costs: securing hard money loans which can be very expensive and come along with extremely stringent and painful covenant restrictions
- Severe equity dilution – or even loss of all your equity investment in a deal!
- Sometimes it’s just a squirrelly deal!!
- A good deal is not quite able to get done, or
- You’re being quoted ridiculously high and prohibitive costs to get your deal done.
Opportunity Investment Capital’s unique credit enhancement process is structured to minimize the risk to our investors – thereby allowing us to better price our risk into your short term financing package. Clients will be required to enter into certain structural agreements that ensure Opportunity Investment Capital will be able to protect our investment. As long as the principal can make the debt payments as agreed, the Opportunity Investment Capital credit enhancement process will make your loan less risky to Opportunity Investment Capital and to your bank – while reducing your costs and helping you get your deal done!
