Bridging loan for what ? usually where you need short term funds, in lou of expectation that the other side of the river, is the cavalry. ie, some other expected revenue / financial support. eg. partnering ? strategic etc ?
What a crap fest of a loan deal.
"Upfront interest payable of S$90,000 and an interest rate of 3% per month for the first 3
months, 4% per month for the fourth month, and 5% per month on the fifth month and
thereafter. Default interest shall accrue on the amount outstanding on a daily basis at the
rate of 8% per month up to and including the date on which the Lender receives full
payment of the outstanding amount, together with the accrued default interest."
"Administrative fee of S$60,000 payable to Advance Capital Partners Pte Ltd (ACP). ACP is
a private limited company registered in Singapore and has been appointed by the Lender
as its authorised representative to coordinate and manage the Bridging Loan.
• Legal costs and expenses incurred by the Lender in connection with the Bridging Loan
amounting to S$15,000 shall be paid by the Company"
Otherwise, the interest rates paying are almost like my credit card.
Much Worse.
Fees and legals = 7.5% (60k + 15k /1m) + up front 9% (90k / 1m)
And if i am reading that these other rates are per month, not per annum then its loan shark rates.
and 3% per month x 3 months = 9% and if extended 4% and 5% for the subsequent months.
So total cost on the 1m borrowed is 16.5% upfront fees plus 3% + 3% + 3% + 4% + 5% potentially = 16.5% + 18%. = 34.5% They are borrowing 1m, to potentially pay back $1,345,000 if i read that correctly ???
And add however they are getting shafted twice with the 8% on default interest compounding rate. ?
What is that ? 8% on the outstanding interest not repaid yet. ? So they have the above rates on the 1m principal, and 8% per month, on the interest accrued, per month ?
Say they dont pay any of it back until the 5 month period ? the interest is also compounding on the 8% x (3+3+3+4+5)% x 1m
So you borrow 1m, and you lose fees of 165k up front ,leaves you with 835k to use as funds, which you then owe to pay back interest on the 1m, and compounding shaft rate on the interest amount.
This is loser finance. Cant paint this picture any other way, except that they had better have a much larger rabbit to pull out of the hat to cover up the crap the elephant just did on the finance stage.
What was the alternative ? a CR or go into administration ? Surely they need to reach out to strategic partnering and kick the door down, than just speaking softly in the street outside.
Great tech, but needs financial muscle to partner it.
Expand
