The constraint
Traditional lenders were not a fit for this transaction.
What Duneland arranged
Duneland sourced a private investment firm willing to step in and structured a $2.54M three-year facility at 12% with interest-only payments through the term, creating a bridge to a future refinance while keeping near-term debt service manageable.
Duneland reports sourcing a private investment firm and structuring a three-year facility. The stated purpose was to create a bridge to a future refinance while managing near-term debt service. A planned refinance is an intended exit, not evidence that refinancing later occurred or that another lender committed to it.
What the published case does not establish
The purchase price, buyer contribution, fees, collateral, covenants, prepayment terms and later refinancing outcome are not published. The reported 12% is a rate, not a disclosed all-in annual percentage cost or a quote available to another borrower.
Applying the questions to your transaction
What to examine in a similar deal
The following is general financing analysis, separate from the historical facts above. It does not describe additional work or terms verified in this case.
Make the payment arithmetic explicit
Illustration from the reported figures: $2,540,000 × 12% = $304,800 annual interest, or $25,400 per month on a simple annual-rate-divided-by-12 basis. This assumes the full balance is outstanding and excludes fees, day-count differences and other obligations. It is a calculation, not a verified historical payment schedule.
Plan for principal repayment as well as interest
With interest-only payments, scheduled interest does not reduce principal. Under the illustration above, $2.54M remains to be repaid at the end of three years if there are no principal repayments or other balance changes. Model an exit that fails or is delayed as well as the intended refinance; the original loan agreement controls the actual obligations.
Review the source of repayment
OCC commercial lending guidance asks bank examiners to identify repayment sources and assess their adequacy. That is a useful analytical question here, not a claim that this private investment firm was governed by those bank-examination procedures. Identify the evidence supporting a future refinance and the alternatives if it is unavailable.
Reference: OCC: Commercial Loans, examination procedures 10–11, pages 14–15.
Questions to bring to a financing review
- Why are traditional lenders not a fit for this particular transaction?
- What cash flow supports interest and the business’s other obligations throughout the term?
- What must change or be demonstrated to support the intended refinance?
- What happens if refinancing is unavailable at maturity, and what do the actual loan documents require?
Start with a brief transaction summary and the figures you have. Duneland can identify the information needed for the next discussion; a preliminary review is not a lending decision.