borrowers

In general, there are two types of borrowers. The first type has a project and a dream, the second type has a project and a dream along with the experience and capability to pull it off. The second type is also well prepared, heavily documented, fully staffed, and ready to move forward.

The second type obviously has the best chance at securing financing because they already have what they need and know what they want. Does this mean that they will attain their financing goal? Not necessarily because there are many more variables to consider. The most important of these variables is the question of "what are they bringing to the table". Just because you have all the qualities of the second type of borrower means nothing without the proper collateral.

Collateral takes many shapes and forms. In days past, it would have been acceptable to own assets such as land and buildings which, in the best of cases, were owned outright or had a high percentage of equity which could be pledged as collateral. It would also have been acceptable to have 20% or 30% of "skin in the game" mostly in the form of architectural plans and an entitled piece of property that is "shovel ready" to build the project upon. Unfortunately, these types of assets in todays market are treated by lenders on a secondary basis because (1) their values have done nothing but fall for the last18 to 24 months and (2) lenders are incapable of predicting the future and think on a worse case scenario where they will continue to fall in value.

That leaves us with the only other form of collateral that has the capability to be used in any market. Cash, or a financial instrument with almost the same liquidity as cash. Without this type of collateral, lenders cannot and will not take the risk to loan to the project and as we all know, risk mitigation is inherently built in to any lending situation.

So what it boils down to in the end is that those who have the liquidity necessary to mitigate the risk that the lender is taking, by loaning you money, are the entities that will secure the financing to build their projects. Notice I used the word "secure" the financing. Without liquidity you are unable to table the collateral required to close the deal.

Cash (or liquidity) is king. Always has been and always will be. Unless you have at least 20% of your total project costs readily available, there's a 99% chance that you won't find your financing anywhere and you'll end up beating your head into brick wall until it knocks you out.

If (and thats a big IF) you do have the 20% liquidity required by most good lenders, the question becomes, how do you ensure that it doesn't disappear into either the project, or in most cases into the lenders pockets, because most of the time it comes from investors who were nice enough to find it within their hearts (and wallets) to back your project. Wouldn't it be an ideal situation to be able to provide your investors (or yourself, if its your money) with a healthy return on their investment and at the same time guarantee that their dollars were safe and sound and will be returned to them at a certain time period in the near future.

This is possible under the right circumstances and available to those who are the second type of borrower mentioned above (and most importantly without upfront costs of any kind). All you need to do is find it. Open your eyes.

P