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Securing Non-Recourse 100% LTC Project Financing: The Structural Requirements for Our $50M+ Institutional Program

  • Writer: American Business Capital
    American Business Capital
  • Oct 31
  • 3 min read

Introduction


Visualizing 100% LTC non-recourse project finance requirements: $50M+, 1.2x DSCR, and 25% equity custodial account.

For sponsors managing major infrastructure, energy, or real estate projects, securing financing that covers 100% of the Loan-to-Cost (LTC) on a non-recourse basis is the ultimate objective. While this structure is rare, it is available through highly specialized, large-scale private capital sources, such as our dedicated Institutional Fund Program.

However, access requires more than just a good concept. It demands a project that meets a precise, non-negotiable matrix of structural, financial, and readiness requirements.


If your project exceeds $50 Million USD and you are seeking a 100% LTC solution, here is the exact framework required for submission and approval.


Part 1: The Non-Negotiable Financial Structure & Terms


Conceptual diagram of institutional project funding structure, emphasizing 6% fee and non-recourse security.

Our Institutional Fund Program operates on a fixed set of terms designed for stability and clear expectations. These structural points are built into the financing and are not subject to negotiation:

  1. 100% Loan-to-Cost (LTC) Financing: The loan covers the entire project cost, eliminating the need for sponsors to deploy cash equity upfront.

  2. Fixed Annual Interest Rate: A highly competitive fixed annual interest rate, quoted at the time of formal engagement.

  3. Upfront Facilitation Fee: A 6% Upfront Facilitation Fee is charged, which is built directly into the financing and not required as a cash payment at closing.

  4. Loan Term Structure: A 4-Year interest-only construction/stabilization period that converts into a 25-Year Fixed Rate note.

  5. Non-Recourse Structure: The financing is non-recourse to the sponsor. Liability rests solely with the Special Purpose Vehicle (SPV) established for the project.


Part 2: Mandatory Eligibility Metrics for Project Qualification

To qualify for consideration, projects must demonstrate financial strength and valuation metrics that mitigate risk for the capital partner. Projects that do not meet the following mandatory metrics cannot be accepted:

Metric

Requirement

Sponsor Context

Minimum Project Size (Total Project Cost)

$50 Million USD

This program is reserved for large-scale, institutional-quality developments.

Minimum Debt Service Coverage Ratio (DSCR)

1.2x DSCR

The project’s projected net operating income must be able to cover the annual debt service by at least 1.2 times.

Appraisal Value

120% or more of the Total Project Cost

An independent, third-party appraisal must confirm that the project’s completed value will be at least 120% of the funding amount.


Part 3: The 25% Equity Balloon: A Key to 100% LTC Non-Recourse

The most critical security feature of this 100% LTC non-recourse structure is the Equity Balloon. This mechanism is often misunderstood:

  • Requirement: The client must secure 25% of the total project cost in liquid cash equity (the Equity Balloon).

  • Purpose: This cash equity is NOT spent on construction. Instead, it is placed into a secure, third-party custodial account to act as a readily available reserve/guarantee.

  • Benefit: This provides the capital partner with a high level of security without forcing the sponsor to lose control or liquidity of the funds during the construction phase.


Part 4: Documentation and Project Readiness Prerequisites

Before a project is submitted for formal review, it must be near the point of execution. "Shovel-ready" projects that have cleared key documentation hurdles receive priority and are the only projects considered.


The prerequisites include:

  • Signed, Bankable Contracts: Evidence of a secure revenue stream is mandatory. This requires a signed, bankable, long-term contract for the project’s product (e.g., a Power Purchase Agreement (PPA), long-term corporate lease, or off-take agreement).

  • Independent Third-Party Studies: Submission of comprehensive, independent, third-party Feasibility Studies and Market Studies is required to validate the project's financial projections and demand assumptions.

  • Permit Readiness: The project must be near Permit Readiness, demonstrating that the development process is advanced and regulatory hurdles are largely cleared.


Next Steps for Project Sponsors


Hard hat, blueprints, and documents representing project readiness, feasibility studies, and bankable long-term contracts.

The combination of 100% LTC financing, a non-recourse structure, and a competitive fixed rate is a rare opportunity designed for highly structured, large-scale projects. By clearly defining the $50M+ minimum and the 1.2x DSCR requirement, we ensure submissions are aligned with the capital partner's strict criteria.


If your project meets the 100% LTC requirements outlined above, you are prepared to move beyond preliminary discussions.


Learn more about our Project Finance approach and submit your project for review on our dedicated page: Review Our Project Finance Program Today


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