Most capital-seeking “borrower” clients mistakenly begin by prematurely “shopping for loans,” wrongly assuming they are in any position to do so. They start by asking premature questions about “terms of the loan” and how fast it can be “given,” completely forgetting whether they are prepared and qualified yet to receive one.

All companies who successfully obtain project funding always pay soft costs to cover time and expenses(disbursements) on the right licensed institutional services and certified preparation work to make sure they will be qualified, have a “banking compliant” documents package, and have the right kind of Collateral that can be widely accepted. By definition and law, such payments are safe, ethical and lawful as a legitimate retainer to cover the actual cost of tangible, deliverable professional services of known, standard, verifiable and independent commercial value.

There are many compelling factual reasons and objective realities to explain why institutional preparation, Collateral, and certification services should and must be paid for by the “borrower” client:

• Client Responsible for Own Project – Supporting institutions and collateral providers do not “owe” clients free licensed work because they also have funding sources. Clients are fully and solely responsible for offering their projects or transactions, which must be bankable, asset-backed and certified at their own expense. Funding sources are required to reject clients who are not prepared – quite the opposite of any obligation to make somebody else’s project qualified “for free.” There is a never-ending supply of infinite thousands of other projects already qualified that funding sources can and should accept instead.
• Client Must Believe in Own Project – Funding sources are not responsible for the merits and qualifications of a project, and must be critical and proactively try to disqualify projects. “Borrower” clients must demonstrate and convince sources that they believe in the success of their project and are confident in the merits of their funding application. Clients who refuse to pay reasonable and customary costs of licensed work on their project, asking for or insisting on only a “free ride,” are considered a risk of the project being “fraudulent” and are immediately rejected.
• Success Fees Only for Funding, Not Qualifying – Success Fees are the only real compensation for the even more expensive and valuable work of implementing funding transactions with the end funding source(s). Funding work is separate and cannot begin until the project is certified as bankable. Institutions cannot and will not invest in mere qualifying work (the client’s sole responsibility to obtain and provide) only to recover those costs from Success Fees that ultimately depend entirely upon the merits of the client’s project. Clients who refuse to pay the actual costs of preparing their project, asking to pay only from “success fees,” raise serious “red flags” of likely “hidden defects” in their project indicated by their perceived “lack of confidence” in themselves, and also disregard the distinctly separate value and compensation earned from the funding closing alone.
• Prohibition Against Conflict of Interest – The provider of financial services (making the project “bankable,” providing Collateral, structuring the deal, and certifying the funding transaction) must be independent and objective. A provider investing in the costs of making it qualified violates applicable laws and license regulations by a prohibited “conflict of interest.” Suppose the provider can only recover the costs of preparing, certifying and endorsing the transaction (the client’s responsibility) from funding “success.” In that case, the entire certification is discredited, undermined, and otherwise useless to all funding sources. This misguided and counterproductive approach only causes losses and damages to both the “borrower” client and the certifying provider and is an obstacle preventing funding that would otherwise be successful.
• Must be Legal Basis for Licensed Help – Licensed financial institutions are prohibited (by licenses and regulatory laws) from freely volunteering active support to make projects bankable and give them Collateral without having a clear legal basis to do so. Just as lawyers and law firms cannot “represent” clients unless, based on a signed contract and payment of retainer (covering at least actual costs and expenses, even if otherwise on “success fees”), financial institutions cannot provide regulated expert technical assistance to clients without the same arrangement, the only possible (and mandatory) legal basis for giving licensed support is a signed contract for “financial advisory services” that must be activated by a paid retainer.
• Collateral Almost Always Needed – The key to successful project financing is taking advantage of multiple countries and jurisdictions, navigating through country-specific limitations or current economic crises. All actual project financing is genuinely international. The end funding sources are rarely from the same country as the client, so even the best collateral assets are almost always in the “wrong country” to be effectively attached or foreclosed on by the end lender or investor. For these reasons, practically all funding transactions require obtaining universal third-party collateral assets that can be quickly closed in all countries without any burdensome process. Acceptable Collateral is entirely the client’s responsibility, and the client must cover the costs of acquiring and structuring it into the transaction.