A financing option that’s rarely considered, but very useful is structured joint venture financing. While it isn’t everyone’s cup of tea, when used at the right time for the right thing, it can be very beneficial.
Today we’ll be looking into structured joint venture financing and discuss when a business should consider it.
What is structured joint venture financing?
To define that we need to discuss what a joint venture is. A joint venture, often referred to as a JV is a business arrangement where 2 or more parties pool in their resources for a particular project or business activity.
A joint venture is like a partnership, for a particular project of business activity alone. All parties involved are therefore responsible for the profits, losses, and costs associated. The venture, however, is an entity of its own, separate from the parties involved.
A structured joint venture loan is a financing option that allows you to maximize on the cash flow potential of a borrower by including the lender into the equation. The lender also becomes a partner in this venture, sharing profits and losses with the borrower.
Reasons an organization should consider structured joint venture financing:
To leverage resources
A joint venture makes the most of the combined resources of all parties involved to achieve the goals of the venture in question. One party might have a well-established manufacturing process for the venture, while the other might have better distribution channels for a better supply chain process. Together, the two parties can work together to create a smoother project ad benefit from it. In the case of structured joint venture financing, the lender has the funds required. In fact, private lenders like GCP Fund have expertise in various industries, making them the ideal lender to partner with.
The concept of economies of scale can work to your advantage in a JV. By working together, each party can bring something to the table that can help reduce the overall costs.
Global Capital Partners Fund is a leading private lender based in NYC with over 3 decades of experience in the industry. They provide a variety of commercial financing solutions that range from hard money loans to asset-based lending in Florida, North Carolina, South Carolina, Texas, and Georgia. The company also offer bridge financing, which is used for a variety of property types including retail shopping centers, mixed-use properties, multi-family commercial buildings, hotels, warehouses, office buildings, etc. Get in touch with their representatives at +1-800-514-7350 or email@example.com.