Commercial Financing

Business Financing Solutions

At Black Cowrie Finance, we empower businesses of all sizes to thrive and achieve their objectives without being hindered by cash flow constraints. Commercial financing serves as a vital mechanism for providing working capital to businesses, enabling them to seize growth opportunities and overcome financial hurdles.

In recent times, the commercial financing landscape has evolved significantly. While traditional banking institutions were once the primary source of financing, the emergence of alternative commercial financing providers has expanded the options available to businesses.

Commercial financing encompasses a diverse range of business finance products, offering both short-term and long-term solutions tailored to the unique needs of each business. Businesses often turn to commercial financing when they are on the brink of growth but encounter obstacles, typically stemming from funding limitations. FBS is here to offer innovative financing solutions to fuel your business’s growth journey.

How and why does CAP Funding use a financial guarantee?

For project developers, Financial Guarantees serve as an excellent mechanism to obtain advantageous terms and enable access to funding that might otherwise be out of reach. Note: This is NOT an INSURANCE policy.

For aligned sponsors or backers of guarantees, CAP’s innovative structure enables scalable realization of strategic or business goals, depending on whether the prospective guarantor is passive or actively participating in the project being funded. The main advantage for guarantors is preservation of available cash (non-cash assets are often used for guarantees) while still having a big impact on cash liquidity and other benefits.

What is a CAP Financial Guarantee? Sharply different from a traditional loan guarantee, which would stay in place for the life of the loan, BlackCowrie’s CAP guarantee taps into our Family Office’s private capital reserves to mitigate the risk of new project completion and delivery. This contrasts with the more traditional path of a loan guarantee, which we do not require, where a loan guarantee would enhance the borrower’s credit for the life of the loan.

Instead, BlackCowrie funding uses a Completion Assurance Guarantee (CAG) to mitigate at least some of the risk of project non-delivery.

CAGs are similar to loan guarantees used by institutional lenders, with the funding structure of such loans using a Special Purpose Vehicle (SPV) that provides limited or no recourse for the lender in case things go wrong. But here, with BlackCowrie’s funding, the private Family Office funding is secured by a relatively short-term, partial or full CAG, which usually involves a bank (so the guarantee can be safely delivered and held until the project is built and commissioned to begin commercial operations); then it is allowed to expire and is removed.

BlackCowrie turns the traditional project finance process upside down, saving everyone time and trouble, with the flexibility to accept quite a different risk profile, even if not “shovel ready,” without expecting control, and with quite favorable terms.

Traditional funders won’t know with any sort of precision how much risk is too much. Ask them. They’ll describe a blind alley where the funder will “know it when they see it” (but usually not until due diligence, if you get that far), making the certainty of securing the money illusory, and often the work required just to make a clear determination, a yes or no answer, can become quite expensive.

Traditional lenders also often use a senior lien (pledge of collateral) against the project’s assets as “first” line protection, with loan guarantees a close second in case the borrower defaults on repaying the loan.

Refreshingly, BlackCowrie is far “faster, easier and better” and far from traditional. BlackCowrie solves a set of common problems in the project finance industry and thus can afford to offer better terms for up to 100% financing with zero initial costs, but also BlackCowrie saves clients time and trouble with another innovation: a reliable and efficient pre-application process, resulting in greater certainty (less guesswork) and far fewer wasted steps.

We can offer a yes/no verdict quickly, without dragging our feet, based on confirmation of the Completion Assurance guarantee, with several handy guides to assist you in making this “light” process logical, stepwise, and linear.

What is the guarantee for? Why is it needed? How much coverage?

The CAP guarantee itself acts as a source of assurance, transactional security, or “surety” that the project will be fully funded and completed and commissioned to begin commercial operations.

Once the project reaches Commercial Operation Date (COD), the guarantee instrument is allowed to expire and is released. If there are delays, the guarantee can be renewed until COD has been reached. In practice, if issues arise, the parties will “keep their eyes on the prize” of completion, knowing that project delivery is key to everyone being paid. If there are problems that cannot be solved, worst case, then with decades of experience, we work them out some other way. For example, what if the project itself cannot be completed (we would reassign the guarantee to one that could be), or the site is not viable (pick another site), or the developer gives up, leaves town, or forfeits their own project (as ridiculous as that sounds, we’ve seen it happen!), then we step in and identify players that will take it over.

While traditional lenders structure loans with collateral and as close to zero risk as they possibly can (which itself can takes months or years to perfect), our Family Office takes on different risks, including any remaining credit risk, technology risk, and performance/execution risk, … as true joint venture (equity) partners. Operating in this way, BlackCowrie’s capital partner uses a more forgiving (less picky and particular) underwriting standard.

How much of the total funding requested needs to be covered by a guarantee? At least 30%, but in practice it is better for the developer/owner to obtain 50-80% coverage. Why? Faster draw schedule and less expectation for equity carried interest. Ideally, about 70% coverage is sufficient to enable advantageous terms and conditions. If the funding requested is close to our minimum ($25M), then a higher percentage is needed, as the minimum guarantee face value we can accept is ~$18M, so whatever is above that (no matter what the percentage, above the minimum 30%) is to your advantage. More guidance on how to use CAG leverage.

The client’s “credit enhancement” extends only until COD. The instrument guarantees that, one way or another, the project will be delivered. Nobody gets to give up or point fingers if something goes wrong. The parties will work together to finish the project. If they do not, or it is determined that they cannot, for some reason, then the underlying problem will be solved, whether that means it was a personnel issue (someone gets replaced), a site usability issue (if irreparable, find a new site), a technical issue (work together to find a solution), or even a fundamental project viability problem following a lengthy cure period (worst case, transfer the guarantee to a new project that gets delivered instead). In practice, the instrument will not and must not be called.

Why we have advantages over bank and institutional finance

Offering to fund up to 100% of the project budget is something banks would never do. Banks seek a separate equity partner or cash from the developer’s side to reduce credit risk. Our unique structure funds projects through a US family office using a combination of debt and minority equity carried interest, which will be negotiated and committed once we complete our due diligence.

Further, we do not ask for loan collateral (a senior lien on the project’s assets); instead, we offer mezzanine debt, requiring no pledge of collateral as security once the project begins operations. The developer and our investment partner co-own the SPV’s project assets, enabling project developers/owners to build out qualifying pipelines more rapidly with this “Completion Assurance” Program™ (CAP funding) approach, advantageous terms, and an expedited process.

Facilitating such a guarantee for a non-recourse loan can be relatively straight-forward or quite a challenge, depending on (a) whether or not your own company has assets (balance sheet depth), or a strong enough credit rating, to involve a rated commercial bank or credit union, or (b) how you go about inviting a sponsor with deeper pockets to bring forward a guarantee on your behalf.

If using a sponsor (a rich uncle, well-established EPC or Construction firm, OEM, etc.), they will be asked to propose a “specimen” (sample) guarantee, and BlackCowrie will review it and offer either feedback or approval of the instrument verbiage, confirming that at least one of our funder’s banks is willing to receive it to fund the project in full according to the disclosed Uses of Funds.

Important sidebar: many bankers, OEMs, EPC firms, and even some well-established General Contractors quite often will misread this request for a usable guarantee simply because they are unfamiliar with CAP funding’s unique structure. There are some subtle but important differences to standard (mainstream) practices with CAP that offer advantages for the company seeking funding. But note that we are NOT looking for a traditional completion bond, or insurance, nor a traditional completion guarantee, nor a loan guarantee, as mentioned above. Although this “Completion Assurance” guarantee serves as security for the funding, and thus has elements of these other guarantee forms, it is actually none of the above.

Our CAP funding’s guarantee is entirely standard within the International Chamber of Commerce (ICC) Uniform Rules for Demand Guarantees (URDG), ICC pub no. 758 (2010 edition), or ICC590 or ICC600 (following “standby” rules), and can take on several forms including a Standby Letter of Credit (SbLC), which is by far the best type as it has fewer restrictions, resulting in faster funding. Under URDG ICC 758 only, we can also accept a Bank Guarantee (BG) or variations on that title so long as it adheres to our template’s verbiage (wording). We can also accept a Sovereign Guarantee (SG) with bank confirmation.

Within the Private Wealth and Private Banking divisions of the bank, the required verbiage is completely normal and expected, as it mirrors their standard practices.

So long as this bank-involved “demand guarantee” involves a different bank on both ends, and is thus a true financial instrument (not an insurance product), with face value large enough for the funding requested — at least 30-70% or more of the project total budget — then BlackCowrie’s funding partners can provide project funding, up to 100%, with some as mezzanine debt and the rest as equity carried interest. The exact split will be negotiated with the client after due diligence completes.

For more on the “art and science” of using financial guarantees to secure this advantageous project funding.

Why does this matter?

We usually offer better terms, making up to 100% funding accessible, and we reach closings more quickly (less than 30 days, once pre-qualified) compared to the traditional route, which can instead take many months, if closing is even possible, given that underwriting standards are based on not just the likely case but worst-case scenarios across a range of risk or perceived hazards or conceivable downsides that BlackCowrie, as equity partners, simply do not factor in. Our funder also fills the gap between the guarantee face value and the total required capital, usually as an equity “kicker” (again, the exact amount will be negotiated in good faith upon completion of our due diligence, for which we do not charge), but without expecting control.

The biggest challenge with Project Finance is securing it. Sometimes the offer seems “too good to be true” because, well, it is. So many developers waste time with funders that cannot deliver, for various reasons, because the underwriters are looking for the rare project that has no appreciable risk left unmitigated. The process of obtaining comprehensive insurance wraps can help flesh out which risks are insurable and which ones are inherently not. BlackCowrie CAP funding turns that equation around and funds commercially viable projects that may have additional work to begin or complete construction, but we will work with partners to get started and reach COD without delay under terms that are usually more favorable for the client than anticipated.

Summarized, short version of why this matters? To obtain the benefits and advantages of BlackCowrie’s “next gen” capital, and to radically improve funding certainty. We say “faster, easier, better.” For exactly how we achieve that for your particular projects, read on.

Stage of Readiness does not matter

Such guarantees streamline investor/lender due diligence, ensure continuity and certainty of reaching closing(s), thereby greatly expediting funding and delivering better and more generous terms. Further, we can accommodate projects that are not yet shovel-ready (we can cover the costs of remaining development steps as part of the loan/investment package), and simultaneously overlook various other risks or vulnerabilities that would likely delay or outright kill opportunities for otherwise securing a project’s funding.

Defining & understanding financial guarantees

All financial guarantees — BlackCowrie’s “Completion Assurance” as well as traditional Loan Guarantees — are legal instruments (an official letter) that assign some or all of the responsibility for an investment or a loan. Developers that can facilitate BlackCowrie’s CAP guarantee will transfer some of the risk of non-completion to the guarantor as a way to align the parties on project delivery. We use the market value proportion of the guarantee instrument — they are usually discounted from issued face value — to access established commercial lines of credit at BlackCowrie’s funding banks, which must be asked to approve the instrument for this purpose, along with our partner’s own holdings as an equity investment.

By contrast, a loan guarantee would consider non-payment of the loan itself a form of default, while a financial (completion) guarantee instead uses the borrower’s breach of contract (loan agreement), such as due to fraud, malfeasance, or other failure to honor obligations before COD, following a cure period. Nobody wants to see the instrument get called. Such guarantees are a “last resort” promise or pledge — a type of credit enhancement (improvement of the borrower’s credit profile) — in the event of non-performance, which the traditional loan guarantee could experience at any time prior to the loan’s repayment.

Financial guarantees also differ from Completion Bonds (insurance), although such insurance-backed “completion guarantee” products are often used by developers or hired contractors in addition to our CAP financial instrument. The difference is subtle, but important: Completion Guarantees are issued and backed by insurance companies, while financial instruments used for project financing involve a bank so that closings and funding can move with greater security, loans can be at lower rates of interest, and equity partners can be gained that do not expect a controlling interest. Project funds move on an automated draw schedule with certain aspects similar to so-called “Smart Contracts”.

These and other innovations offer great advantages to project developers and their hired vendors, sponsors, intermediaries, and contractors.

BlackCowrie project finance uses primarily bank-related guarantees (traditional “standby” or “demand guarantee” as a Bank Guarantee / SbLC or non-traditional Avalized Promissory Note) until COD to ensure that the assets are completed and commissioned to begin commercial operation. We can also accept a Sovereign Guarantee with public/private cooperation, once it is verified by a rated commercial bank.

Benefit: a financial (completion assurance) guarantee frees up the parties to do their respective jobs, with …

Less risk aversion by BlackCowrie investors, more streamlined due diligence, greater flexibility in working with issues, including a willingness to pay for any remaining pre-construction steps
Greater speed and certainty in reaching closing and first funding (once pre-qualified, mutually-acceptable terms will be available within 2-4 weeks), and then less scrutiny after reaching financial closing, during construction, along the way to Commercial Operation.
Fewer constraints or restrictions placed on the operating company, such as longer loan tenors (allowing plenty of time to repay the loan, no penalty for early repayment), ability to invest in the local currency, and no lien against operating assets (see below).

Financial guarantees serve to both expedite and backstop the capital, providing mutual protection from bad behavior such as fraud, gross negligence, or other incurable breach of contract.

Originally, sovereign guarantees were instituted to make up for market failures*, but in modern times, capital guarantees are now used in the commercial (private) sector to streamline project financing by simply holding developers and their counterparts to their promise to honor the terms of the financing. With BlackCowrie’s Completion Assurance [Guarantee] Program™ (CAP), the guarantee is offered as a form of surety/security that the project’s assets will be completed and commissioned to reach COD.

Even if you are already familiar with loan / financial guarantees, or similar techniques for credit enhancement, please read our materials carefully, as there are many sharp differences between the conventional uses of guarantee instruments (namely trade finance, and so-called “documentary” letters of credit — see below for further clarification) and how they are used for access to this advantageous, next-generation project funding.

Conventional loan guarantees are used by most institutional, non-bank lenders as an additional layer of security (as a form of “credit enhancement”) until the loan has been repaid in full — for the “life of the loan.” Such lenders also require a pledge of collateral to secure the Senior Debt via the project’s operating assets — equipment, buildings, etc. Here, with CAP, we require NONE OF THAT. We can accept either a Bank Guarantee / Standby Letter of Credit (BG/SbLC) or Avalized Promissory Note (AvPN) that goes away upon COD; there is no Senior Debt required (our offered debt capital is closer to mezzanine) nor is there a pledge of collateral via the project’s operating assets.

Instead, the project company or a third-party sponsor most often works with a rated bank to transfer completion risk to that institution. Upon COD the guarantee is dropped.

To be clear, a similar type of financial guarantee (a type of Letter of Credit or LC) is widely used in trade finance: an irrevocable “documentary” LC, issued by a bank to a third-party beneficiary and promising to pay on behalf of the transaction originator a specific sum of money against delivery of documents satisfying the terms and conditions of the LC. That is also not at all what we are doing here.

With project finance, the original asset or collateral underlying a Standby LC/BG is “preserved” and must remain “blocked” (the banking term that means “held for a particular purpose”, in this case, the lender/beneficiary) until successful completion of the project. Upon reaching COD, this SbLC/BG is released — technically, it is allowed to expire and thus goes away, with the underlying collateral left untouched. Some purchased SbLCs can be cashed or monetized upon expiration, but that’s not what most BlackCowrie CAP customers do.

The asset type that can be used is up to the issuing bank and the project owner/developer/sponsor/backer. See below.

Whether a Bank Guarantee/SbLC or Avalized Promissory Note, we use Uniform Rules for Demand Guarantees (URDG, ICC publication 758; see below), and BG/SbLC and confirmed Sovereign Guarantees use the customary SWIFT system for bank-to-bank communication, where SWIFT itself helps maintain the chain of legitimacy, as any bank instrument of sufficient size will tend to attract fraudulent activity.

We also now accept a Promissory Note (simple template available) that would be Avalized (a stamp or seal) by a rated bank. An SG, BG/SbLC, or Avalized Promissory Note (APN) is issued in favor of someone other than the owner of the underlying asset (called the “beneficiary”), collateralizing the asset while allowing for an investment/loan against it. APNs are a special case, as they’re not issued by the bank, and the “exposure” to the bank depends on the asking party’s creditworthiness.

We pay careful attention to fairness and mutuality in these dealings, and although widely practiced, it is easy to misunderstand and assume there is no protection for the issuer if they are going to issue a guarantee in favor of another party to make sure they do not default. That is simply not the case. The issuer is fully protected under the preferred rules. See Note #3 below.

Further notes on this:

Ordinarily, MT760 is used to block or set aside cash-backed assets — which does not necessarily mean cash on deposit, by the way, a misnomer — in favor of someone other than their owner. When an MT760 SWIFT is issued, the issuing bank puts a hold on their client’s funds, blocking the client from using them for another purpose temporarily, while the instrument is operative (in force). This arrangement does not USE the funds that are blocked; it is well controlled and designed to see through the project’s completion, then the underlying asset is released (technically, it is allowed to expire and fall away on the “maturity” date).
Note that, once issued, if there are no loan funds transferred, then the BG/SbLC or APN has no effective value. In fact, it can be unwound or returned right away, not that anyone would actually do that, having come that far. Just clarifying for bankers that may confuse this SbLC or APN with trade-related transactions (Documentary LCs), where the guarantee serves to protect sellers (exporters) and buyers (importers), where the underlying capital assets are transferred (paid) to the seller upon satisfaction of the terms of the transaction. With a project finance-related guarantee, the instrument is released and returned to the guarantor upon project COD (completion of the project construction/commissioning) per the terms/conditions of the loan agreement.
Under these banking rules, the guarantee issuer (the project developer/owner/sponsor) is protected against the guarantee being arbitrarily called or used for any purpose other than intended — backstopping the project financing. Thanks to well-proven Uniform Rules for Demand Guarantees, ICC pub. 758 (URDG 758), it is quite safe because it is difficult to make a claim against or “call” (cash or draw on) the instrument and prevail in the courts.

In general, guarantors can be any of the following:

- An involved private party, such as a well-established engineering (EPC) firm or general contractor, technical services firm, or diversified corporation, usually with a commercial interest in the project. Offering a modest equity carried interest helps align incentives, but some well-established EPC or general contractor firms do not wish to own an equity stake.

- At large, “sponsors” or “backers” include private family offices (single or multi), dedicated funds, or specialized impact investors of various types. Their guarantees usually involve offering an equity carried interest in the project.

- Sovereign governments — typically the Minister of Finance can issue a Sovereign Guarantee (SG) on behalf of the nation’s treasury. Developed countries will not issue SGs (they don’t need to), nor will the poorest (IDA) countries, typically, except when the IMF does not object.

- Development finance institutions like Export-Import (ExIm) Banks, regional development banks, or multilaterals like the U.S. International Development Finance Corporation (DFC, America’s development bank, formerly OPIC & USAID), though such institutional guarantees would be heavily discounted.

More about the underlying rules for such project finance transactions with Bank Guarantees / Standby Letters of Credit, called the Uniform Rules for Demand Guarantees (URDG 758), including legal analysis that compares who benefits and to what degree.

Will it be worth it? What are the tradeoffs?

In all cases with project finance, the guarantor assumes an obligation only if the borrower defaults (material breach of contract following a reasonable “cure” period). In that unlikely event, which really must not happen, some investors or lenders would not “call” (require repayment) of the loan, as the existence of the guarantee enables the parties to work through any issues and, if there is no way to finish the project, come to an equitable solution. In that sense, guarantees avoid or prevent criminal actors and their unethical practices of fraud, malfeasance, money laundering, etc.

Guarantees constitute leverage and can be used to greatly enhance the developer’s credit while qualifying for better investment/loan terms, faster closings, and greater freedoms than could otherwise be afforded without similar accountability/backstop / surety.

In conclusion, such BG/SbLCs, AvPNs, or SGs used for CAP funding will not work for everyone, and although often free to the project owner, not always within reach. Owners need to have a project that is provably feasible, well planned, and confidence, but some degree of humility (social skills) to gain proper attention and earn trust.

The guarantee itself is not usually free to the project owner, as the involved bank charges a fee to issue it, with three exceptions: 1) Sovereign Guarantees (not available in all countries), or 2) When a sponsor, such as an EPC firm or general contractor, can be involved as the source of the qualifying guarantee, or 3) When a qualified company issues an Avalized Promissory Note (APN), where the bank providing the Aval views the PN as coming from a creditworthy customer, in which case no collateral is required, and the bank typically does not charge the issuing company for the Aval — or at most, charges a nominal processing fee. But if not creditworthy, the bank will likely say the PN issuer will need collateral, as their Aval makes them a likely target in the event of default.

In cases where the source of the guarantee can be authenticated and verified as part of a legitimate practice, we may be able to advance the cost of the bank issuing the instrument just slightly ahead of the first draw of funding. If this is your requirement, be sure to let us know.

How can BlackCowrie help a developer secure a guarantor for CAP funding?

We can help arrange guarantees for projects we finance under a Management Services Agreement, with a tightly defined scope of work and timetables for each milestone and deliverables. To avoid these service costs, if you are seeking project capital, better to bring forward your own guarantee or cash deposit as part of qualification for CAP funding.

There are no up-front fees whatsoever if developers bring forward the required capital guarantee or cash deposit without asking us to “sponsor” the project owners. Our preferred model is direct financing of qualified projects, and we are committed to providing the tools and techniques to make that easier.

Note that BlackCowrie’s Registered Affiliates may also be adept at building your project’s qualifying profile, as they have received training via our MasterClass to serve your needs.

For example, we offer sample contractual language to assist you with proposing that asset owners you know “sponsor” a Completion Assurance Guarantee (usually in the form of a partial Standby Letter of Credit).

Is a capital guarantee right for you?

History shows that it has worked out well for many developers seeking faster, easier, and better access to available capital for qualified projects of US$25 million or more.

All that said, we realize CAP is not for everyone. Some developers just do not have the patience or drive to explore possible sources of a qualifying completion assurance guarantee, which would be unfortunate (the advantages would far outweigh the costs or effort), but fine. The only time CAP does not work — which is the one time that qualification is just not within reach — is when the developer has no liquidity, inadequate credit, and also no possibility of gaining support from a backer/sponsor/senior lender (minimum 30% of the project’s total funding, perhaps delivered in 2 or more tranches or chunks) because there is no contractor or well-established vendor or anyone else that can be involved. The project is just not solid enough to involve others.

This unfortunate scenario assumes the project is also not part of a public-private cooperation with a national government agency involved that could “sponsor” that way, or some other creative solution. Is that true for your situation? It is rare, but it happens.

* “Market failures” in the sense that small borrowers, especially those in developing countries, regardless of creditworthiness, sometimes lack access to the credit resources available to large borrowers, or borrowers in more developed parts of the world. (More in the article or original paper at EconBiz.de archive.)

The difference between a Bank Guarantee and a Standby Letter of Credit (LC or Standby LC / SbLC) is subtle, but in the US and most developed economies, a BG and SbLC are effectively the same thing. Most often in the US, the instrument is called an SbLC, but a BG elsewhere.

As stated above, UNLIKE trade finance, which uses these instruments to guarantee payment upon receipt of goods, BlackCowrie uses an SbLC or Sovereign Guarantee (when available), or a cash deposit, to ensure completion of a project’s construction and commissioning to commence commercial operations. In other words, it is designed to prevent fraud.

How to finance mid-market projects with Completion Assurance Program™ (CAP) — faster, easier, better

We follow three well-defined stages to greatly increase your odds of success in securing funding for middle-market projects. Pre-qualification (stage 1) eliminates most of the uncertainty that tends to hold up conventional project finance. Everyone who contacts us appreciates our fast, initial response (yes or no) to funding feasibility. We’ve been in business since 1996, so all that experience is to your benefit — we have streamlined and solved many of the notorious problems associated with Project Finance, using an innovative structure built to enable access to private capital.

Prepare: Apply & Pre-qualify for the Completion Assurance Program™ (what makes CAP different?). Pre-qualify by gathering the first 4 of Six Essentials, but first

Check that your project fits the basic conditions (mostly that it is at least $25 million or larger in an industry/sector that we can accept; see complete requirements for funding, then email us a high-level summary to be sure, ideally a 1-2 page Information Summary or teaser; DO NOT SEND YOUR FULL BUSINESS PLAN).
You may want to scan our “Financeability Checklist” to make sure you are adequately prepared.
If we confirm our interest in funding your project, use our CAP Funding Proposal Builder to disclose the Six Essentials.
Upon acceptance of the uses of funds, instrument verbiage, and proposed timing of monthly capital draws, we will launch our rapid due diligence, typically reaching closing in 30 days or less. What to expect: We will usually respond to initial inquiries within 72 hours.
Decision-making Guide:
a) What if the project does not qualify for the Completion Assurance Program? Consider alternative paths to mid-market project funding above $50 million.
b) If $50 million in total funding, can you bundle or group together more than one project or combine/aggregate initial development costs with the other costs to reach at least $25 million ($25M-$50M is fine for CAP) total requested capital? If not, consider our advisory services.
c) What if seeking M&A to sell/acquire, roll up, or form a merger? See our alternative funding programs
d) If there is no equity carried interest available to the funder, and no guarantee, is a 20% debt service reserve cash deposit available? This is our newest Line of Credit option: 4-6% APR, 3-4 months to funding, still up to 100% funding.
e) What if seeking venture capital or trade finance, seed-stage venture funding, or other (non-project) forms? Instead of CAP, or our alternative funding programs, your situation requires a separate Management Services Agreement; see fee-based advisory services.
Present package to receive binding offer to fund project: Once pre-qualified, you will receive a binding offer to fund your project(s) within 2-3 weeks, typically. If the offer is accepted and contracts entered, we will reach financial closing within just a few days following delivery of the hard copy of the Guarantee Instrument. Without CAP, the timeframe to closing and first funding via alternative funding pathways is likely the more traditional 90-120 days, which starts once we have a complete, accurate, and polished file that highlights only what investors need to know in summary form, with financials prepared per US GAAP or IFRS accounting standards. Without such preparation, timeframes are anybody’s guess. Far too many projects never reach closing!
NOTE: If we are bringing in your project’s sponsor (as guarantor and/or equity partner) for funding, doing additional packaging or development work under a Management Services Agreement, please refer to the timeline for that Statement of Work (SOW).

Partner: Using monthly draws of funding, proceed to finalize any remaining development work, design/engineering, build, commission, and launch commercial operations. First draw of funding within 30-45 days of closing, with subsequent draws per pre-approved schedule (see examples on pgs. 3-4). In practice, draws accommodate critical path construction milestones and cash flow requirements, ideally the same amount each month. Once approved by the funding bank, the transfer of funds is literally guaranteed.

That’s it! Compared to traditional project finance, our novel approach is streamlined and far more systematic/programmatic / predictable. As a result, it is also much faster, once you are prepared.

BlackCowrie Completion Assurance Program™ (CAP) Funding

Black Cowrie’s Completion Assurance Program™ (CAP) delivers advantageous funding for qualifying mid-market projects, $25m+ ($50m-$2b preferred), at any stage of readiness (see below), located almost anywhere, within our focus areas (sustainable food, real estate, waste-to-energy, etc...) when developers arrange short-term security to assure project delivery in a usable format. See also “Security,” below.

CAP funding Benefits Summary

New for 2025: Security solutions that are organized as either DIY, self-performed, or “Done-For-You” (DFY) premium services.

In effect, we guarantee 100% of the project’s money, but a partial financial guarantee or cash security deposit from your side assures project delivery — this is NOT a loan guarantee.

Does your project satisfy all four CAP funding cornerstones?

Any reasonably well-defined, mid-market project can fit with our partner’s conditions for accelerated financing. We define “fit” as any project, or portfolio(s) of projects, that satisfies our 4 S’s:

SIZE: $25 million or more per project; if less than $25m, consider building a “pipeline” or portfolio of multiple, related projects under one finance facility. Upper limit is in US$ billions.
NOTE: Temporarily, with cash surety deposit only, we can go as low as $14m funding, if a $5m deposit (35%) can be arranged. We reserve the right to raise this minimum threshold at any point in the future. Deals in motion will remain qualified.
SECTOR or SPACE: We prefer projects that deliver positive impacts, but note that we can support almost any project that (at minimum) does not cause or perpetuate social or environmental harm – more than 30 industries in our sweet spot where we can often add value beyond just funding.
STAGE: Any reasonable stage of readiness, beyond just an idea – does not need to be “shovel-ready” … fine if additional pre-construction development work is needed, once you can show that your project is financially feasible and offer evidence of the last “S”, Security. Some requests are potentially too late stage for CAP funding’s main purpose, but sometimes we can make M&A work, so long as the capital to pay the seller of an existing project (or set of them) can be drawn over time, not in lump sum. Bridging solutions may exist for this scenario. Monthly draws are not an issue when new construction is involved, where project developers do not need all the money at once, mirroring the true cash flow demands of expansions, retrofits, conversions, and of course “greenfield” (ground up) construction.
CAP delivers up to 100% full-leverage funding, mostly often for new construction, expansions, and retrofits. Is your project plan or presentation still fairly early and/or still in development? We may be able to assist with further development work, if needed; gain assistance or shop for a solution
SECURITY: Investment capital can be secured almost anywhere with no interest expense (entirely equity as a JV to be negotiated), using a Security Deposit — top two types lately are collateralized Standby Letters of Credit (SbLCs) until the project is delivered, or highly leveraged cash surety deposits as assurance that funds will be used per our investment agreement. Developers usually provide their own Standby Letter of Credit (SbLC), cash surety deposit, or, when available from the host country’s Ministry of Finance, a bank-confirmed Sovereign Guarantee, but some prefer to work with a “sponsor,” usually compensated to align incentives. BlackCowrie offers flexible solutions to Security, each method effective at screening out fraud, helping to focus the stakeholders to resolve issues that may crop up during construction, and ensuring the project or portfolio reaches completion and permission to begin commercial operation. SbLC tips
Notes:
1. Instead of a bank-involved guarantee, cash surety deposits can be as little as 25%-35% of total required funding. To obtain faster draws and better terms (retain more owner equity), see if it is possible to bring forward cash of ~30-33% or more.
2. First monthly draw of capital within 45 days after closing.
3. If cash deposit is used, it is held in a segregated account, untouched, until the final draw of funding (100% of what is arranged under contract), then released in lump sum.
4. Neither the guarantee nor the cash would be delivered, once verified from our side, until the project’s funding contract has been negotiated, signed, and notarized.
5. While interest rates remain high, CAP funding is equity (carried interest) only — no loan or interest costs — but still for up to 100% funding.

If all four cornerstones fit … here’s how to get started

You can pre-qualify for our funding with our streamlined set of basic facts, aimed at getting a binding offer as quickly as possible.
This means start by selecting a product that best suits your situation. With their conditional agreement to later send this instrument, ask them to fill in the bank name, location, face value amount, and any necessary format changes (ideally on the bank’s letterhead) so we can confirm that the proposed wording is acceptable.

What’s in it for the project developer/owner? Such guarantees streamline due diligence, ensure continuity and certainty of project acceptance (once pre-approved using our 3-stage process), improve investment terms and expedite closings, simply by acting as a source of “security” that the project will be completed and commissioned to begin commercial operations. When that does not occur as planned, the parties work it out.

What types of security can be used? Starting in 2024, clients have been most successful using either a Standby Letter of Credit (SbLC), Sovereign Guarantee (SG) with bank confirmation (in countries that can issue them, mainly developing Asia lately), or a cash deposit, typically 30-33% of the required funds. Other instrument types are also potentially acceptable, but the minimum face value for an SbLC must be at or above $18 million per instrument, or … a minimum 25% cash deposit, described below.

What are the next steps after pre-approval of the security? Once the project sector, budget, type, and location are approved, we ask that you provide project basics (up to 3 or 4 documents can be uploaded) using our tracking system. We will confirm receipt of your registration within a few days.

To enter formal due diligence, leading to an offer of binding terms (if all goes well), we want to discover and verify what we call your “Six Essentials“. Once accepted, we usually offer binding terms within just a few weeks with zero initial cost.

If a guarantee is not within reach …

The last Cornerstone, Security, opens attractive, non-recourse funding for projects that otherwise qualify ($25m+ and other “S” cornerstones); please do not give up on securing a guarantee without a fight. It is the only option for 100% funding without the need for developers to pay at least some initial cash.

When BlackCowrie CAP funding is your best or only option

If you or your immediate circle of co-founders, family, and friends do not happen to have sufficient financial depth, consider a “sponsor” that might be part of the project construction team or an unaffiliated third party. Proper explanation of how the guarantee would be used and why it is needed is key to gaining their support, as is offering them a financial incentive such as a minority equity interest.

When discussing this with potential sponsors, don’t accept the first “no” and just give up. Be sure to approach the guarantee as an experiment in order to become better informed, learning how to best present this opportunity, starting with what’s in it for them to play this role.

If you need this Done For You (DFY), please consider our enhanced service options.

New clients often have questions about this Security, as such guarantees are often initially misunderstood. They are quite different from trade finance-related guarantees, for example, as they’re mainly used to offset project non-completion and eliminate fraud, and not typically based on cash on deposit, such as with bank-issued instruments like the Standby LC.

They’re also unlike loan guarantees in that they are released (allowed to expire and are no longer used) once the project reaches Commercial Operation Date (COD). Traditional funders seek financial guarantees for the life of the loan, as a method of reducing their credit risk, along with a pledge of collateral. CAP funding is different.

Worth noting, financial guarantees can often be provided through counterparties, sometimes called “sponsors,” such as an involved OEM (major equipment supplier/integrator), or a well-established EPC firm or General Contractor hired to build the project’s assets, usually with a negotiated form of enhanced compensation.

For developers who wish to bring in such sponsorship, ask us for a set of slides you can add to your project’s pitch deck, including sample contractual language defining the sponsor’s role and benefits. This helps assist with proposing and explaining a capital/completion guarantee to firms you are interviewing for handling key functions like project engineering, hardware procurement, and/or construction.

If your project hits these four cornerstones, it probably qualifies for favorable and generous terms with streamlined due diligence and much faster and more reliable closings (typically 30 days or less).

Radically Improve Funding Certainty

With this speed and greater risk tolerance comes increased certainty. Why bother chasing other funding sources when anything can happen to throw the deal off the rails? Doesn’t it make sense to first explore this CAP option to its logical conclusion?

With dozens of testimonials from private developers, Black Cowrie Finance’s CAP funding is often the most reliable, affordable, and expedient source of mid-market project financing, with far faster-than-average due diligence. Our funding is available for diverse, qualifying projects worldwide (very few exceptions) when either a partial Standby LC (SbLC), Bank’s Guarantee (BG), Sovereign Guarantee (SG), or cash deposit can be obtained.

In general, BlackCowrie does not currently offer sponsorships for client project funding through CAP at no cost. When such sponsorship is needed, the project developer and/or promoter can use BlackCowrie’s tools and templates to confidently present their project to potential sponsors, or BlackCowrie registered Affiliates may be able to help. Either way, BlackCowrie’s premium services would need to be arranged under a management services agreement (MSA).

We are working diligently to add third-party “impact guarantor” sponsors for targeted sectors and geographic locations — such as waste-to-value, solar and real estate projects in the US — but for now, please register once you are prepared and let us know you are seeking sponsorship.

In a hurry? Developers are encouraged to seek suitable CAP funding sponsors on their own; BlackCowrie Finance or our Affiliates can assist on a case-by-case basis to help accelerate (feature your project’s sponsorship opportunity) via a retainer or fixed-fee contract to serve in this role. Be sure to mention this when approaching BlackCowrie, as we will otherwise give priority to projects that have already facilitated a qualifying guarantee.

NEXT STEPS & FACILITATION GUIDES

Introduction: Why this funding program — its purpose, how it is different, and what advantages it brings
How BlackCowrie CAP solves Four Notorious Problems with securing traditional, mid-market project finance
Review CAP synopsis (cover letter)
COMPLETE STEPWISE GUIDE to CAP project fundraising
Deciding which type of guarantee makes the most sense; guide to Completion Guarantee Facilitation
How to obtain a Sponsor/Backer (to bring a guarantee)
GET STARTED NOW: prepare the Six Essentials by building your Funding Proposal to pre-qualify more quickly.

Additional Resources & Reference

14-minute video “Why CAP and How It Works” from 2020 (update coming in 2022) — explains business logic and mutual protections provided by this program.
Formal (banking) protocol “from inception to completion” (1-page PDF version)
View Animated Developer Briefing online (Google doc)
Register to access Recorded “Developer Briefing” Webinar (August 2020, uses the legacy program name, CGP)

Contrast this relatively simple CAP funding process with what is involved in securing project funding without a Completion (financial) Guarantee, either because the project does not qualify for CAP at all (requires less than $25 million and is thus too small, is not new construction, or requires venture capital instead of project funding).

Quality Industrial Working

When an unknown printer took a galley of type and scrambled it to make a type specimen bookhas a not only five centuries, but also the leap into electronic typesetting, remaining essentially unchan galley of type and scrambled it to make a type specimen book.

Standby Letter of Credit Provider for Commercial Transactions

Companies looking for a standby letter of credit are usually not looking for a definition of an SBLC. They have a contract, financing requirement, supplier, beneficiary, lender or project counterparty that requires a bank undertaking of a specified amount and tenor.

The relevant questions are therefore much more practical.

Can the instrument be issued? Which institution can issue it? What will the issuer require from the applicant? How much collateral will be needed? Will the beneficiary accept the proposed issuer and wording? What will the transaction cost? How will the SBLC be transmitted? What happens if the applicant’s existing bank requires 100% cash collateral?

These are credit and structuring questions.

BlackCowrie provides Standby Letter of Credit arrangement and advisory services for corporate applicants requiring bank-issued credit support for eligible commercial transactions.

We structure the requirement, underwrite the transaction, prepare the file for placement and coordinate with eligible banking and financial counterparties. BlackCowrie is not a deposit-taking bank and does not represent its own balance sheet as the issuer of the instrument.

An SBLC is a credit decision, not a document purchase

A standby letter of credit creates a contingent obligation for the issuing institution.

If a compliant demand is made under the instrument, the issuing bank may have to pay the beneficiary and then seek reimbursement from the applicant. The bank is therefore assuming credit exposure from the moment the SBLC becomes operative.

This is why legitimate SBLC issuance starts with underwriting.

An issuing institution will normally consider the applicant, underlying obligation, beneficiary, tenor, jurisdiction, proposed wording, collateral package, and the applicant’s ability to reimburse the bank if the instrument is drawn.

The analysis becomes materially different depending on the purpose of the standby.

A financial SBLC supporting a payment obligation is not the same credit exposure as a performance standby supporting completion of contractual work. An instrument supporting a commodity supply agreement is not underwritten identically to one securing lease obligations, an advance payment, or an infrastructure contract.

The face amount alone does not determine whether a transaction is bankable.

What BlackCowrie does as an SBLC provider

The term “SBLC provider” is used broadly in the market. It is important to distinguish between the party arranging a transaction and the financial institution that ultimately assumes the contingent obligation.

BlackCowrie acts as an arranger and structured-finance advisor.

Our work may include:

reviewing the underlying commercial transaction;
assessing the proposed applicant and beneficiary;
determining the appropriate standby structure;
reviewing the requested amount and tenor;
assessing available collateral or credit support;
preparing the transaction for underwriting;
coordinating indicative issuing terms;
addressing beneficiary bank requirements;
reviewing proposed SBLC wording;
coordinating documentation and compliance;
supporting negotiations with issuing and financial counterparties;
coordinating issuance and authenticated bank-to-bank delivery.

The ultimate issuance remains subject to the issuing institution’s credit, compliance, and legal approval.

BlackCowrie generally considers corporate SBLC requirements from USD 500,000. Larger transactions are evaluated according to the applicant, purpose, security package, jurisdiction, and available issuing capacity rather than against an advertised maximum face amount.

What can an SBLC support?

Standby letters of credit are used when one party requires an independent bank undertaking behind another party’s contractual obligation.

Common applications include:

Supplier and trade obligations

A supplier may require an SBLC before granting payment terms, committing production capacity, or entering a long-term supply agreement.

The instrument can provide a defined source of payment if the applicant fails to meet the obligation covered by the standby.

Commodity transactions

SBLCs can support obligations under commodity purchase agreements, offtake arrangements and supply contracts where the seller requires acceptable bank credit behind the buyer.

The bank will still want to understand the transaction economics, counterparties, goods, jurisdictions, payment cycle and reimbursement source.

Performance obligations

A performance standby may support an applicant’s obligation to complete specified contractual work.

This is common in construction, infrastructure, engineering, procurement, equipment and other commercial contracts.

Advance payments

Where a buyer makes a material advance payment, a standby structure may secure repayment if the supplier fails to perform in accordance with the underlying contract.

Financing and credit enhancement

An SBLC can sometimes form part of a broader credit-enhancement package.

This does not mean that an SBLC automatically creates a loan.

A lender considering an SBLC as credit support will independently assess the issuing institution, wording, enforceability, tenor, draw conditions, underlying borrower, and transaction structure before assigning value to the instrument.

Why banks ask for collateral

One of the most common questions we receive is whether an SBLC can be issued without 100% cash collateral.

There is no universal collateral percentage.

When a bank asks an applicant to deposit the full face amount in cash, it is effectively eliminating most of its reimbursement risk. If the SBLC is drawn, the bank already controls the funds required to meet the obligation.

For the applicant, however, a full cash block can make the transaction commercially pointless. A company requiring a USD 5 million SBLC may also need the same liquidity to purchase inventory, mobilize equipment, make supplier payments or fund operating expenses.

The correct question is therefore not simply whether 100% collateral can be avoided.

The question is what alternative credit support the issuing institution can actually underwrite.

That can include an existing bank facility, liquid financial assets, corporate credit, a counter-indemnity, third-party credit support or another enforceable security package acceptable to the issuer.

We have published a separate analysis of the options available when a bank requires 100% cash collateral for an SBLC.

The required margin is ultimately a credit decision. It should not be advertised as a universal percentage before the applicant and transaction have been underwritten.

The beneficiary matters as much as the applicant

An SBLC can be technically valid and still fail commercially if the beneficiary will not accept it.

Before issuance, the parties should determine what the beneficiary actually requires.

Relevant points can include:

acceptable issuing institutions;
minimum issuer credit quality;
whether an advising bank is required;
whether confirmation is required;
currency;
face amount;
expiry;
governing rules;
place of presentation;
draw conditions;
required demand documents;
automatic extension provisions;
reduction mechanics;
partial or multiple drawings;
governing law where applicable.

Resolving these matters after issuance can create amendments, additional bank charges and avoidable delays.

Where possible, proposed wording should therefore be substantially agreed before the issuing institution releases the operative instrument.

ISP98, UCP 600 and the wording of the instrument

Standby letters of credit are documentary undertakings.

The underlying commercial dispute is generally separate from the issuer’s obligation to examine a presentation against the terms of the standby.

For this reason, wording matters.

Standbys are frequently issued subject to the International Standby Practices, ISP98. Depending on the transaction and bank documentation, UCP 600 may also be relevant.

A beneficiary should know what it must present to make a compliant drawing. An applicant should understand precisely what circumstances allow the beneficiary to make that presentation.

Ambiguous wording creates unnecessary risk for both sides.

The objective is not to make an SBLC long. It is to make the obligation, expiry, presentation requirements, and drawing mechanics sufficiently precise for the parties and banks involved.

MT760 is not the same thing as MT799

Another source of confusion in the SBLC market is the use of SWIFT terminology as though the message type itself creates credit.

It does not.

An MT760 is commonly used for the issuance or transmission of guarantees and standby letters of credit through the SWIFT network. The operative value comes from the undertaking of the issuing institution and the terms contained in the instrument.

An MT799 is a free-format bank-to-bank message. It may be used in connection with transaction communication, but an MT799 is not a substitute for an operative SBLC simply because somebody labels it “proof of funds” or “RWA.”

Applicants should focus less on requesting a particular SWIFT message as the first step and more on establishing a transaction that an issuing institution can approve.

What BlackCowrie needs to assess an SBLC request

A serious application should identify the commercial requirement clearly.

At a minimum, we generally need to understand:

the legal name and jurisdiction of the applicant;
the beneficiary;
the required face amount and currency;
the purpose of the SBLC;
the underlying contract or transaction;
the requested tenor;
the proposed issuing-bank requirements;
beneficiary wording or a draft instrument, if available;
the applicant’s financial position;
proposed collateral or credit support;
source of reimbursement if the instrument is drawn;
required execution timeline.

Corporate KYC, beneficial ownership information, source-of-funds information, and supporting transaction documentation are required as the mandate progresses.

An email stating “Need USD 10M MT760, top 25 bank, no collateral” is not an underwritable transaction.

What we do not provide

The standby letter of credit market attracts a considerable amount of terminology that does not correspond to normal bank underwriting.

BlackCowrie does not treat SBLCs as commodities that can simply be purchased and resold.

We do not structure transactions around claims of guaranteed monetization, secret bank trading programs, or fictitious returns generated merely by placing an instrument into a “platform.”

We also do not regard an unsolicited PDF, screenshot, SWIFT copy or purported bank message as evidence that an instrument is genuine.

Legitimate issuance requires identifiable institutions, authorized bank channels, compliance, documentation and a credit basis for the issuing obligation.

The same principle applies to third-party credit support.

There are legitimate structures in which another party provides collateral, indemnification or credit support. That is materially different from the internet-market proposition that a company can “rent” hundreds of millions of dollars of bank credit for a small fee without meaningful underwriting or recourse.

What does an SBLC cost?

There is no responsible universal answer.

The economics depend on the transaction.

Relevant variables include:

face amount;
tenor;
applicant credit quality;
collateralization;
issuing institution;
beneficiary requirements;
jurisdiction;
underlying obligation;
complexity of the proposed wording;
legal and documentation requirements;
correspondent or advising-bank costs;
credit-enhancement requirements where applicable.

A transaction can therefore involve issuing-bank commissions, arrangement costs, legal expenses, SWIFT or correspondent charges, collateral costs and professional structuring fees.

BlackCowrie does not quote an applicant-specific issuance price or collateral requirement in a public article because both require underwriting.

That information belongs in an RFQ.

Our process

For eligible transactions, the process is straightforward.

1. RFQ submission

The applicant provides the proposed amount, purpose, beneficiary, tenor, jurisdiction, and transaction details.

2. Preliminary assessment

We determine whether the requirement falls within our scope and whether there is a plausible route to execution.

3. Mandate

Where BlackCowrie accepts the engagement, the commercial terms, responsibilities, and scope are documented.

4. Underwriting and structuring

The applicant and transaction are reviewed in detail. We identify weaknesses that could prevent placement and determine the appropriate issuance or credit-support structure.

5. Counterparty placement

The transaction is presented to suitable banking or financial counterparties based on the required instrument and risk profile.

6. Indicative terms

Available terms are assessed against the applicant’s requirements and the beneficiary’s acceptance criteria.

7. Documentation and compliance

KYC, corporate documentation, underlying contracts, security documentation and instrument wording are completed as required.

8. Issuance

Following final approval and satisfaction of conditions, the issuing institution releases the instrument through the agreed banking channel.

No professional arranger can guarantee the credit decision of an independent issuing institution.

Requesting an SBLC quote

A company seeking an SBLC should know the commercial obligation it needs the instrument to support.

The initial request should state the face amount, currency, applicant, beneficiary, transaction purpose, requested tenor, jurisdiction, desired issuing-bank parameters, and proposed collateral or credit-support structure.

BlackCowrie can then determine whether the transaction is within scope and provide the appropriate commercial terms.

If your company has a live SBLC requirement, request a quote from BlackCowrie.

SBLC issuance is not a document procurement exercise. It is a contingent credit transaction. The most effective route to execution is to structure it accordingly from the beginning.

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