More About Funding

It’s crucial to provide our clients with a clear understanding of the entire bank instrument sales process, from creation to maturity. Bank instruments are asset-backed notes issued by banks to clients, with a maturity of 5-10 years and an annual coupon or interest.

To truly grasp the purpose and functions of bank instruments, defining what they are is essential. Banks create paper notes (“IOUs”) that they sell to clients, guaranteeing a specific annual interest and maturity value. This allows investors to collect their expected profit while the bank accesses immediate cash to meet capital requirements for additional financing opportunities.

Bank instruments are different from bonds and are rather complex. Depending on the instrument, some offer high annual interest rates, are backed by top-rated banks, and are issued only in amounts of $20 million dollars or greater. The critical benefit of bank instruments is that they can be purchased at a discount from face value and traded to clients in the secondary market.

To make this topic more accessible, we’ve created a 5-step summary that clarifies how bank instruments evolve, their relation to private placement programs, and the benefits of purchasing bank notes. Contact us today to learn more about bank instruments and how they can benefit your business.

Please note that the process below is the Banks’ and NOT AltFunds Global’s. Said differently, AltFunds Global does not sell investment opportunities to anyone. AltFunds Global works with registered dealers and brokers to properly structure or promote various funding instruments and programs.

Once the client or trader has been cleared through compliance, the issuing bank will “cut”/create an instrument (Medium Term Note or Bank Guarantee), naming the client or trader as the sole beneficiary. This instrument will have a predefined interest rate (0 – 7.5%/yr.) and a value on its maturity date. At this point, the purchaser would likely pay a discounted rate to the issuing bank, ranging from 60-90% of face value, depending on their relationships and the instrument’s size.

If the client chooses to hold the note, they collect interest and exercise the value upon maturity. If the initial purchaser were a “trader,” they would have a predefined “exit buyer” to buy the note at a higher value (ex., traders buy at 65, sell at 74). As you can see, with spreads like that, if the trader can consistently access instruments, they can organize a profitable private placement program.

Once the first purchaser has purchased the note, they usually resell it to another buyer at a higher price. Though the buyer isn’t purchasing the note directly from the bank, many private placement programs are run by intermediaries who fit right here. Usually, they will purchase the note and make a profit similar to what was made off them (ex., buy at 74, sell at 81). People in this position are usually high-net-worth individuals, large corporations, hedge funds, etc.

The final middleman repeats the process the others have done, but they look for a different type of buyer. In this case, the note has been traded several times and is at a smaller discount than initially; for many, that may not be appealing, but for some, that seems intriguing and less risky. 

Since everyone can verify that the instrument has been owned by several companies (“seasoned”), institutional buyers such as pension funds, hedge funds, mutual funds, and other low-risk ventures flock for security and higher yields. As expected, the final middleman usually sells the note to an institutional buyer for a profit like what was made off them (ex., buy at 81, sell at 90).

The final purchaser holds the note, collecting the difference between the discount they paid vs. face value and the annual interest until its maturity. Though the information above is accurate, the spreads per trade may vary depending on several variables. To state the obvious, different traders, banks, relationships, and strategies can make prices/profits fluctuate.

A Standby Letter of Credit (SBLC) is a bank’s commitment of payment to a third party if the bank’s client defaults on an agreement. Commonly called or well-known in the financial market as a Bank Guarantee (BG) or Standby Letter of Credit (SBLC).

It is a “standby” agreement because the bank will have to pay only in a worst-case scenario. A Standby Letter of Credit is used mainly in the US, where banks are legally barred from issuing certain guarantees. It serves as a parallel (collateral) payment source if the primary source fails to meet its obligations in part or total and is a substitute for a performance bond or payment guarantee. Hence it is called standby credit.

An SBLC is most often sought by a business to help it obtain a contract. There are two main types of SBLC:

A financial SBLC guarantees payment for goods/services as specified by an agreement.

A performance SBLC, which is less common, guarantees that the client will complete the project outlined in a contract. The bank agrees to reimburse the third party if its client fails to complete the project.

Bank instruments enhance the client’s credit, allowing them to access large amounts of capital simultaneously.

Procurement

AltFunds Global procures Standby Letters of Credit (SBLCs) mainly from the top 25 rated banks with a minimum face value of $20 million.

Monetization

AltFunds Global may also provide and/or monetize SBLCs on other top-tier rated and non-rated banks.

Purchase of Standby Letter of Credit (SBLC)

AltFunds Global offers many types of financial services to those seeking to fund their financial endeavours. We work with many private lenders and banking institutions to fulfill your financial needs. There are many ways to arrange non-recourse collateral, recourse collateral, or credit enhancement.

We help to get clients fresh-cut SBLCs from the world’s top 50 banks; issuing banks use SWIFT Network to deliver SBLCs

Advantages of purchasing a Standby Letter Of Credit (SBLC) from us.

• We purchase SBLCs from the top 20 world banks.
• We offer monetization of the instruments in case the clients need this service.
• SBLC is available in EUR and USD.
• Price varies on a week-by-week basis on market conditions. Generally speaking, the price for the world’s top 50 banks is 50 – 53% + 2% broker fee; However, AFG can acquire banking instruments at below-market prices.
• The owned bank instruments can be called back for their total face value at the end of the year since it is yours to cash out.
• The minimum face value for selling a Standby Letter of Credit (SBLC) purchase is $20 million.
• After receiving the MT760, the client has five (5) to seven (7) banking days to complete the payment.
• Pre-advice for the MT799 is included along with the SBLC.
• No documentation for your project required
• The agreement is signed and returned within 72 hours of completion.
• MT760 offers SWIFT delivery to your bank.
• Brokers receive up to 0.5% commission.
• SBLC is specific to each client’s needs (on best effort basis).

Standby Letter of Credit Monetization

SERVICE AND INSTRUMENT DESCRIPTION:

Complete Recourse Loan and Non-Recourse Loan monetization of Standby Letter Of Credit (SBLC) for the intention of project funding. This is the agreement we contractually have with our clients and AltFunds Global. We never require our clients to pay upfront fees for monetization and are only compensated when a project is completed.

There are four monetizations that we use:

Bank SWIFT. This (BG) is delivered between the two banks through SWIFT MT799 and SWIFT MT760.

The monetizer must return the Standby Letter of Credit (SBLC) to the issuing bank 15 days before the Standby Letter of Credit (SBLC) expiration. Monetization LTV for a Non-Recourse Loan (this loan has a lower LTV, but you don’t have to pay it back):

Our LTV varies from 8% to 100% depending on the bank’s credit rating, the issuing city, the languaging of the buying instrument, and the client’s needs.

How long does it take?

7- 10 banking days after the paperwork has been submitted and the instrument has been sent via SWIFT to our monetizer.

Disbursement of funds

• If it is less than $ 500 Million USD or EU, the payment has to be
• The funds are disbursed in 12 months.
• Once the MT-760 is authenticated, three weeks later, 20% of the funds will be disbursed.
• A month after the original disbursement, 20% more will be given.
• Finally, the last 60% of the funds will be divided over the remaining ten months and distributed monthly.

Our closing process

SWIFT Closing Process

Once the paperwork is completed, the client sends SWIFT MT799 to the bank to set up the release.

After receiving the SWIFT MT799 from the client’s bank, the Monetizer’s bank will reply with a SWIFT MT799 RWA to receive.

Once the client’s bank receives the RWA to receive the bank instrument, the client sends SWIFT MT 760 to the monetizer’s bank.

Once these SWIFT MT 760 are received and authenticated, the monetizers must respond within a week to grant the non-recourse loan.

At the end of a year, the Monetizer has to return the SBLC within 15 days of the anniversary of the contract.

Required Documents:

• Fill out the Bank Instrument Monetization Application.
• Complete the Bank Instrument Monetization Application and email it.

Compliance Standard:

• Accepted Standard: MUST be delivered by SWIFT.
• Rejected Standard: Bank Instruments from the Forbidden Assets and Financial Instrument Providers List.

Important Information:

Please note that the days are banking days, and weekends or holidays are not counted.

Banking Days & Holidays Calculator

With our bank instrument monetization services, everything is non-negotiable. We will not alter the procedures of this service.

The compliance department may ask for the last three bank statements of the bank account from where the bank instrument will be issued to start processing a monetization application.

Clients typically use this tactic to shop around for a bank Instrument with a provider institution with a banking letter confirming there is a credit line ready to incentivize the provider to send a bank instrument on their behalf. We will never allow this to happen under our company name. We don’t issue RWA or BCL letters.

Recourse Loan Disbursements Example ($10 Million Dollars):

• Bank instrument face value: $10,000,000
• Recourse Loan disbursement (80%): $8,000,000
• Loan commission fees (5%): $400,000
• Total Loan Disbursement:$7,600,000

Non-Recourse Loan Disbursements Example ($10 Million Dollars):

• Bank instrument face value: $10,000,000
• Recourse Loan disbursement (65%):
• Loan commission fees (5%):
• Total Loan Disbursement:

Banks Guarantees are written obligations of the issuing bank to pay a sum to a beneficiary on behalf of their customer if the customer himself does not pay the beneficiary. It is important to note that these Bank Guarantees apply only whenever the issuing bank’s guarantee is not contingent on the existence, validity and enforceability of its customer’s obligation. This is called an “abstract” guarantee (i.e., the bank’s obligation is to pay regardless of any disputes between its customer and the beneficiary).

The issuance of bank guarantees is a private transaction and does not result in the issuance of publicly tradable instruments.

Purchase of Bank Guarantees

AltFunds Global offers financial instruments to those seeking to fund their financial endeavours. There are many ways to arrange non-recourse collateral, recourse collateral, or credit enhancement. We work with many investors from Europe and North American banking institutions.

The world’s top 50 banks issue our Bank Guarantee (BG) purchase, and we use the bank’s SWIFT Network to deliver these banking instruments. We achieve this using SWIFT MT799 and SWIFT MT760.

Advantages of purchasing a Bank Guarantee (BG) from us:

• Our program operates with the top 50 world banks to secure your Bank Guarantee.
• We offer monetization for our bank instrument in case clients need this service.
• BG is available in EUR and USD.
• Price varies week by week based on market conditions. Generally speaking, the price for the world’s top 50 banks is 50 – 53% + 2% broker fee; However, AFG can acquire banking instruments at below-market prices.
• The bank instruments can be called back for their total face value at the end of the year since it is yours to cash out.
• The minimum face value for selling a Purchase Bank Guarantee (BG) is $20 million.
• After receiving the MT760, you have five (5) to seven (7) banking days to complete your payment.
• Pre-advice for the MT799 is included along with the BG.
• No documentation for your project required
• The agreement is signed and returned within 72 hours of completion.
• MT760 offers SWIFT delivery to your bank.
• We offer Bloomberg, Euroclear, or DTC delivery to your bank.
• Brokers receive up to 0.5% commission.
• BG is specific to each client’s needs.
• The deposit is 100 % protected, and the provider bank endorses client payout.

Bank Guarantee (BG) monetization

Total recourse loan and non-recourse loan monetization of Bank Guarantees (BG) for the intention of project funding. This is the agreement that we contractually have with AltFunds Global. We never require our clients to pay upfront fees for monetization and are only compensated when a project is completed. 

We can monetize this through a Bank Guarantee and provide you with a loan through careful negotiations with an attorney-trustee office. This is a loan that you will very seldom have to pay back, and if you do end up having payments, they will be at a low rate. Our clients will receive their funds from an attorney trust bank account with a legal opinion, so our clients won’t have to deal with problems in releasing their funds with their local banks.

There are four monetizations that we use:

Bank SWIFT: This (BG) is delivered between the two banks through SWIFT MT799 and SWIFT MT760.

We can purchase the BG in full, or the client can hold ownership against an Owned Bank Guarantee. Many clients choose the latter option to have a non-recourse loan. Through our contractual obligations, the monetizer must return the Owned Bank Guarantee to the issuing institution at least 15 days before the expiration date of the BG.

Monetization LTV for a non-recourse loan (This loan has a lower LTV, but you don’t have to pay it back)

Our LTV varies from 8% to 100% depending on the bank’s credit rating, the issuing city, the languaging of the buying instrument, and the client’s needs.

Note: 5% commission is paid on non-recourse and recourse loans (Our corporation doesn’t monetize bank instruments from non-rated banks).

How long does it take?

7- 10 banking days after the paperwork has been submitted and the instrument has been sent via SWIFT to our monetizer.

Disbursement of Loan

The loan is disbursed in 12 months.

Once the MT-760 is authenticated, three weeks later, 20% of the loan will be disbursed. A month after the original disbursement, 20% more will be given.

Finally, the last 60% of the loan will be divided over the remaining ten-month period and distributed monthly.

Our Closing Process:

SWIFT closing process

Once the paperwork is completed, the client sends SWIFT MT799 to the bank to set up the release.

After receiving the SWIFT MT 799 from the client’s bank, the monetizer’s bank will reply with a SWIFT MT 799 RWA to receive.

Once the client’s bank receives the RWA to receive the bank instrument, the client sends SWIFT MT 760 to the monetizer’s bank.

Once these SWIFT MT 760 are received and authenticated, the monetizers must respond within a week to grant the non-recourse loan.

At the end of a year, the monetizer has to return the BG within 15 days of the anniversary of the contract.

We monetize instruments that have already been issued (SBLCs, DLCs, CDs, etc.). The minimum instrument size is $20 million, and our fees are 1.5% plus broker fees. 

You can start with our Monetizing Banking Instruments (MBI) program.

SBLC needs to be monetized. This is the credit enhancement as the client has a bank instrument to borrow against it.

SBLC can generally be monetized at up to 80%, on face value, depending on the issuing bank rating and the issuing city; for example, a $100M SBLC issued by a top-rated bank can deliver the client $80 million minus the commissions.

Recourse: AltFunds Global facilitates the distribution of all recourse SBLCs into non-recourse SBLCs by participating in buy/sell programs of the monetized value and relieving the client of the burden of paying back the SBLC.

Non-Recourse – the monetization may be non-recourse – with no need to pay the monetizer back. The monetizer is responsible for paying off the SBLC. This strategy usually generates a lower LTV.

AltFunds Global can issue, accept and monetizes Letters of Credit (LC) with top-rated and non-rated banks. This instrument is usually used in global trade finance and credit enhancement. Some conditions will apply depending on the banking institution.

A Letter of Credit (LC) is a bank service ensuring payment of the amount indicated in the letter of credit to the seller as per the buyer’s instructions against the shipment of goods, performance of other conditions stipulated in the letter of credit and submission of relevant documents.

Thus, upon transfer of ownership over the goods sent by the seller to the buyer and submission of the document confirming the fulfillment of other conditions of the LC, the bank (issuer) will ensure the transfer of payment to the seller’s account.

Advantages of LC for the buyer:

• Elimination of risk of losing money for the buyer
• Payments are made after fulfillment of the seller’s contractual obligations
• Transfer of ownership over shipped goods to the buyer within the period indicated in the LC and according to other terms

Advantages of LC for the Seller:

• Guarantee of payment independent of the buyer (subject to the fulfillment of contractual obligations)
• Possibility of payment before handing the goods over to the buyer
• Possibility of execution of complex commercial contracts

This debt instrument has a date of maturity and a face value annual interest rate and is sold by the central banks to investors. Term maturity is typically 5-10 years and is used for large projects with financing requirements and a need for more solid investors. This type of funding can be used as collateral, place a lien and monetization. unclear

AltFunds Global will issue MTN through the world’s top 50 banks and use Swift MT760/799.

How we protect our client’s deposits

• You never have to worry about your security with our three levels of protection: (note: the rest of this is a link).
• Selected and Frequent Bankers/Providers have been vetted by former FBI and CIA agents.
• The client can deposit their capital or asset in one of our trusted attorneys’ Trust accounts.

A Safe Keeping Receipt (SKR) is another bank instrument used as an alternative financing tool. These instruments can be issued from banks, storage houses, or alternative financing facilities.

Types of monetizable SKR:

• Fur
• Collectible art
• Gold
• Above ground assets
• Property
• Antiques
• Valuable documents
• Precious gems
• Bonds

This collateral-based banking instrument provides alternative financing to those that need it most. Those that issue the SKR do not own them, so the asset must be returned if requested. Those that own valuable items can take out an SKR against them. These are similar to LC, bonds, SBLC and BG. SWIFT MT542 is used for the transfer service.

AltFunds Global doesn’t provide any SKR reports; this is the client’s responsibility.

Performance Bonds are a written guarantee from a third-party guarantor (usually a bank or an insurance company) submitted to a client or a customer by a contractor/undertaker to commit that whatever he has promised will be delivered within the specified time of that contract and if he fails to deliver the same the shortfall or the entire sum committed will be paid/covered by the issuer of the performance bond. A Performance Bond ensures payment of a sum (not exceeding a stated maximum amount) of money in case the contractor fails in the full performance of the contract.

Performance bonds usually cover 100% of the contract price and replace the bid bond on the contract award. However, a performance bond is not an insurance policy, and (if cashed by the principal) the payment amount is recovered by the guarantor from the contractor. It may also be called a standby letter of credit or contract performance bond.

The Courtesy Deposit product is straightforward. We arrange deposits to be made at acceptable financial institutions worldwide. The deposits we arrange cannot be encumbered, pledged, put in jeopardy, used to collateralize your loan, or used to guarantee your loan. Your lender does not have the right to offset against our deposits. No funds can or will be deposited into your bank account. Only your banker will have access to the funds used to purchase the Certificates of Deposit at the bank. However, the deposits we arrange may motivate your banker or the loan committee to look more favourably at your loan package. In addition, in this highly competitive banking era, your loan package will stand out in front of any banker or loan committee with our product attached.

We do not look at the particulars of your loan package. We do not run credit checks or evaluate your project. Your funding request or project has no bearing on our capability to execute the delivery of our product. We are only concerned that our simple requirements are met so we can successfully arrange the deposits at the financial institution you requested.

Whether or not the deposits we arrange into your financial institution of choice accomplish your desired results is not the responsibility of AltFunds Global, its affiliates or its agents. We will never get involved with your banking transactions. Your banking transactions are between you and your banker.

The deposits we arrange on your behalf must never be at risk. Acceptable institutions will carry appropriate insurance to cover all deposits transferred under our program. FDIC insurance in the USA guarantees that each deposit we make will be repaid. We will verify this issue at length with the financial institution you request.

The deposits we arrange cannot be encumbered, pledged, put in jeopardy, used to collateralize your loan, or used to guarantee your loan. Your lender does not have the right to offset against our deposits. No funds can or will be deposited into your bank account. Only your banker will have access to the funds used to purchase the Certificates of Deposit at the bank. Misrepresenting these terms to any involved party could increase your transfer expenses or make the transaction unviable. We will verify this issue at length with the financial institution you request.

All required fees are paid into the AltFunds Global Trust Account before any movement of deposits into your requested bank. Once you complete our application document and receive your funds in our trust account, we will process the transaction and arrange for the Courtesy Deposit within ten business days. Once the Courtesy Deposit has been ordered, you cannot cancel the transaction. Provided our terms have been adhered to, your fee is refundable if we cannot confirm the Courtesy Deposit in your bank within ten business days of your fee arriving in our trust account.

How a Courtesy Deposit can act like a rich uncle

We purchase a Courtesy Deposit to boost the capital made available to you by a financial institution. 

How it Works 

A bank, hedge fund, or other FDIC-insured financial institution agrees to fund the client if AltFunds Global makes a Courtesy Deposit (CD). We deposit capital into the financial institution when the client receives funding. 

You need to find a financial services company willing to fund your project on the condition that we put up our capital and purchase courtesy deposits from them. If you are in North America and need help finding a bank, we are happy to provide additional services and help you find a financial services company designed to help you fund your project.

You must have a solid business plan and complete the ‘Know Your Client’ form.  

Our capital and the CDs we purchase for you cannot be held as collateral. Said differently, our capital can only be held collateral if you repay your loan/line of credit to the financial institution.

Fees 

Our fees are a one-time 7% on the total Courtesy Deposits purchased. It’s illegal for a client to use our funds to pay us for our service. Our fees need to be available before we put up our monies. You can ask your financial institution how much funds we need to put up, and you can see if our one-time fee of 7% is available.

How to apply for Courtesy Deposit 

Complete the Courtesy Deposit Application and forms.

Courtesy Deposit Loan 

AltFunds Global assigns a trusted registered dealer/broker to you. The registered dealer/broker will take a deposit of a minimum of $550k and will turn to provide you with a loan of five to ten times the amount of the deposit. We turn 10% of the capital needed into 100%. 

How it works  

The client raises one-tenth of the liquid capital needed for a specific project or initiative. We work with registered dealers and brokers to fund 90% of the project. 

Requirements

Clients must have a solid business plan, complete the ‘Know Your Client’ form and provide proof of funds (10% of total requirements in liquid capital). 

Note: banking instruments can replace the need for 10% in liquid capital.

How to apply for Courtesy Deposit Loan

Complete the Courtesy Deposit Application and forms and send them to us.