The Process
We will go into some detail here on the steps necessary to get our client’s funded:
Project/Business Submission
Prospective client presents their project or business for funding by supplying the underwriting information above. The more information about the project or business the better.
For the proof of funds, we are looking for our potential clients to show a minimum of $400,000.
Project/Business Approval
Allies Capital will inform the client of approval or denial within two business days. Upon approval a letter of intent (LOI) will be issued with a general outline of the next steps involved in the process. Upon the client accepting the terms of the LOI, the business owner is now formally an Allies Capital client.
Allies Capital does require some fees and refundable deposits to move to the next step in the process. They work as follows:
Processing Fee
There is a one-time processing fee to cover the legal and administrative expenses. This is 1% of the required deposit. Although this is paid upon the acceptance of the LOI, it is 100% refundable if Allies Capital is unable to secure financing for the Client. Thus, the minimum processing fee is $4,000, but can vary from project to project.
Default Deposit
Allies Capital also requires a refundable default deposit be made into a secure IOLTA Trust Account designated for the transaction located at Bank of America. The purpose for the deposit is to protect us from a client who decides, after LOI acceptance, to withdraw from the program prior to final funding approval. The reason this is necessary is the private investor is putting up large sums of money to secure a bank instrument to back the funding for the Client. Once the process begins the private investor is at risk, which means Allies Capital is at risk due to our agreement with the private investor. To mitigate this risk we require our Clients deposit a minimum of $400,000 into the IOLTA Trust Account. However, the amount will vary depending on the financing package size.
We want our Clients to feel comfortable with the transaction and understand the apprehension of committing funds when we haven’t conducted business before. That is why the client can make the default deposit directly into the IOLTA Trust Account. That way Allies Capital never handles their default deposit which ads an additional layer of protection for our Clients.
We give the private investor a maximum of 120 days to have the bank instrument issued and monetized. However, the process typically takes 8 to 10 weeks. The deposit is refunded upon successful monetization or if Allies Capital fails to secure the financing for the Client in 120 days. The only time the client’s funds are at risk is if they terminate the program prior to 120 days.
Submit Financing Package
Once the LOI is accepted, the processing fee is paid, and the Default Deposit is made into the IOLTA Trust Account we submit the client’s package to the private investor. The private investor then initiates the purchase of the bank instrument. The bank instrument, in most cases, is a Stand By Letter of Credit. The bank instrument is a tool the private investor uses to secure the funds necessary to finance the client’s project or business. It typically takes 15 to 20 banking days to secure the bank instrument.
It’s important to differentiate between a calendar day and a banking day. Banking days are days banks are open for normal business. Saturdays, Sundays, and holidays banks are closed for normal business. Thus, they do not count as a banking day. Ten banking days is typically two calendar weeks.
Once the bank instrument is issued it is then monetized, which is converting the bank instrument into cash for the project. This usually takes 15 - 20 banking days.
Once monetization is complete the client’s default deposit in the IOLTA Trust Account is returned in full.
After monetization, on average, it takes 20 banking days to fund. The reason for the 20 days is the funds need to be seasoned. Once seasoned the funds are released to the client according to the agreements.
If Allies Capital cannot secure financing for your project or business within 120 days of submission to the private investor the Processing Fee and the Default Deposit are returned in full to the Client.
Legal Documentation
While the private investor is generating proceeds off of the trade the legal documents will be produced based on the LOI. If, for some reason, Allies Capital and the Client cannot come to an agreement on the final documents the Client can cancel with only the Processing Fee being at risk. The Default Deposit is returned in full within 48 hours of written notice.
The entire process, from project approval to funding can be done between 30 and 120 calendar days.