MATCHED FUNDS PROGRAM
MINIMUM $ 500.000


This program provides borrower wiyh a collateral instrument having a present value and face amount equal to the amount of the loan. This collateral is purchased from the lending bank by a Collateral Provider ; This provides the lending bank with the funds it uses to make the loan.

This collateral is transferred to the Borrower. At loan closing, Borrower provides the Lender with collateral, the CD that lender has just jussed. This CD has a present value equal to the amount of the loan and fully secures the loan principal in the event of default by Borrower. Since the CD has been iussed by the lender, there is no problem with acceptability of the collateral.

The Borrower, obligated to make interest payments to the lender, must convince lender that sufficient cash will be generated from the business project to make interest payments on the loan.

THE TRANSACTION:
Borrower requires for project $ 1.000.000
Collateral Provider buys collateral from lending bank, at a cost of $ 2.000.000
Borrower receives from Lender $ 2.000.000
Borrower retains for project $ 1.000.000
Borrower pays to Collateral Provider $ 1.000.000
In addition the Collateral Purchaser receives at the closing a Certificate that contains the irrevocable promise by the Lending Bank to pay the annual interest on the total amountof the CD.
Note: all figure are approximate


MATCHED FUNDS PROGRAM ADVANTAGES TO LENDING BANK

1. Loss of loan principal is eliminated.
In event of default by Borrower, Lending Bank is fully collateralied.

2. Lending Bank is exposed to loss of only one interest payment.
Any interest payment unpaid by Barrower could be repaid by a security interest the Lending Bank will have in the assets of the Borrower.

3. In event of default by Borrower, Lending Bank may re-lend funds repaid from CD.
The funds recovered from the liquidation of the CD that secures the loan principal may be used to accomodate new lenders. The new loans will generate sufficient interest income to offset the continuing obligation of the Landing Bank to pay interest on the CD

4. Funds for the loan are provided by the sale of the CD. As a result of the sale of the CD to the Borrower the funds from the Sale of the CD are used to make the loan eliminating the need for the Lending Ban to use its own funds.

5. Collateral for Loan is guaranteed tp be acceptable.
The sale of the CD by the Lending Bank and its subsequent use as Collateral for the Loan eliminates the need to question the validity of the Collateral.


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