Project Financing In The Era Of Derisking In The Caribbean

By NAN Business Editor

News Americas, NEW YORK, NY, Fri. Oct. 7, 2017: There is no denying that new global banking rules, especially derisking in the Caribbean, has started to seriously impact developers and even governments seeking to borrow for that next mega project in real estate, infrastructure, energy or mining, or to refinance that high interest loan.

Some of these tough new banking regulations are also now creeping into the private lending sector but the good news is that developers and governments who have sound projects with funds on hand for lending costs can still secure the capital they need in about 90 days.

However, borrowers still have to do a lot more legwork ahead of time because they still must prove that they can afford the cost of the loan and have a viable project. This includes ensuring they have their business plan and executive summary in place along with feasibility studies, financial statements, including assets and liability statements, and financial forecast and a solid return on investment plan.

In the case of a construction project – hotel, multi-family housing, office building, etc, the cost of the land may be figured into the construction loan amount, if the borrower doesn’t already own the lot. Developers can either pay cash for the land, or they can contract to pay cash for the land when the project’s completed, or they can pay it out of the loan.

Invest Caribbean Now (ICN), the global private sector investment agency of the Caribbean, says their pool of finance partners for good projects or government refinancing across the region is still solid despite the crisis of derisking.

However, ICN advises developers and governments, that in order to raise capital, the work must be put in to ensure the project documents are ready and they must understand that there are costs involved in raising money as more and more funders are look to see “skin in the game.”

The fees are largely to cover consultancy, compliance, underwriting to a commitment with document issuance and due diligence and legal costs. There are also closing costs as well, which is payable on signing of a JV Loan Investment Contract. But it is often possible to obtain bridge funding for part of the closing costs for qualifying clients.

But funders fees only become payable when your project has been approved for entry and a Commitment to Fund is issued by the lender.

ICN says most funders offer 60-40 deals for most projects and may take a JV position. However, interest rates are usually very low with ICN partners.

ICN is now offering through its partners, construction loans of between USD5 million and up for ‪‎Caribbean construction projects like mixed use developments, multi-family properties and hotel construction or refinancing, purchase or bridge loans of between USD$1mln to $100 mln as well as projects in mining and energy.

In addition, there are various unique financing options in debt and equity capital raise on major projects of US$10 million and up available for qualified developers with mega infrastructure projects globally who are seeking low to no interest financing options.

Lowered interest rates are also available for governments seeking to refinance debt or raise growth capital.

Financing for the Caribbean is still possible right now despite derisking as long as the project is viable and proof of funds are available, ICN executives say, while urging those who meet the requirements to contact them for more details at