About-BondWhat is A Bond?

In finance, a bond is defined as a debt security. The issuer of the security pledges holders of the debt an interest in the coupon. This means that bond holders receive a certain amount of interest on the loan they give.

 

Depending on the terms of the loan, the issuer is required to pay interest (the coupon) first, and the principle at a later date. A bond therefore is a contract that promises to repay borrowed money at fixed intervals until the loan is paid back plus interest. Often times, the issue will create a private placement memorandum and offer the bond, versus a public bond offering.

A bond is like a loan. The issuer is the borrower (debtor), while the holder is the lender (creditor), and the interest is the coupon. Bonds provide the borrower (often a business) with funds to finance their business, typically with a view of a long term investment. Bonds are repaid over fixed intervals, sometimes over 30 and as much as 50 years.

Bond, like stock, whether common or preferred, are securities. However, the major difference between bonds and stocks is that stockholders have an equity stake in the company (meaning they own part of the company). Whereas bondholders have a creditor stake in the company (meaning they are lenders). They do NOT own any equity interest in the company.

Benefits Of Bond Financing:

  • 100% LTV
  • No Personal Guarantees
  • No Credit Checks
  • No Personal Asset verification
  • No Loss Of Equity In Your Business
  • Quick turn around time – often under 90 days
  • Flexible repayment terms
Eligible Projects:
  • Stabilized Real Estate
  • Construction Projects
  • Major Rehab Projects
  • Oil And Gas Energy Projects
  • Non Real Estate projects such as technology, pharmaceutical, business acquisitions/ expansions, especially Dental, Veterinary, Ophthamology, and all Surgery Practices.
  • Projects must be solid with viable exit strategy and Principals must be proven and experienced.
Bond Underwriting Fees:
Priced for each transaction depending on bond size, location and complexity. We can provide examples of fees in some of our recent transactions. These will be examples only and your transaction may differ.
Term:
Up to 30 years amortized with balloon payment (negotiable)

Interest Rate:
5-7% (higher for under 5 year term)
Points: 5%-8% Third Party Reports:
Client is responsible, at client expense, for any and all reports, appraisals, and any other type of third party compilation about the project.

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