COLLATERAL

MCP’s collateral is predetermined by the type of needs for the project, the loan itself, the term, and the risk MCP is taking. Collateral is a security to protect the project funding. MCP utilizes collateral in different stages of the 100% funding model. Some temporary and some long-term, depending on the capital stack. 

When you take out a lien on a property (mortgage), the commercial property becomes the collateral. When you have a construction project and need a construction loan and the permanent loan with that project, it takes more than just a mortgage. That is what separates MCP from other project funders. 

We solve the issues from the beginning stages of starting the project to the finished stage of getting the project funded and completed.

• Debt Instruments 
• Credit Enhancements 
• Future Contracts 
• Offtake Agreements 
• Bank Guarantees 
• Letters of Credit 
• Commercial Real Estate (CRE) 
• Invested Portfolio 
• Insurance Guarantees 
• Corporate Guarantees 
• Sovereign Guarantees  

The term collateral refers to an asset that MCP (the lender) accepts as security for its project finance loans. Collateral may take the form of multiple types of security for each specific project. Since MCP provides up to 80% of the project funding (i.e., the whole capital stack), it can utilize many different collateral types to fund the entire project. The collateral acts as a form of protection for MCP. If the project or borrower defaults on the loan payments, MCP can seize the collateral and recoup its losses.

• Collateral is an item of value used to secure the project financing (the loan).

• If a project owner/borrower defaults on the loan, MCP can seize the collateral and recoup its losses.

• Collateral minimizes the risk for MCP.

• Collateral provides validity for the project and its likelihood of success.

Before MCP issues the funding, we need to know that the project can repay the loan and protect MCP’s interest. That is why collateral is necessary and is a form of security to safeguard MCPs’ funding. In some cases, collateral can be temporary. For example, there are not any initial assets typically since the construction of the facilities or buildings is not finished during the construction phase, so temporary collateral is used in its place. It ensures that the project (borrower) keeps up with its financial obligation until the project is completed.    

As mentioned above, collateral can take many forms. It usually relates to the nature of the project funding loan. For example, a mortgage is collateralized for a commercial property. Institutional credit is used as a form of security from a credit-worthy (credit-rated entity with a credit rating from Moody’s, S&P, or Fitch) co-signer or borrower. The collateral for a project finance loan is the pledge of interest into the credit-worthy borrowing group (project receiving the funding) and all of the project’s assets.