Extended capital-markets CFO
Staged or delayed funding may reduce the time capital sits unused, but it introduces its own fees, deadlines and conditions. The key question is whether funds will be available when invoices become payable, including if construction slips. Compare committed availability with a nonbinding expectation of future funding. They are not the same thing.
Start with the actual cash calendar
List deposits, progress payments, delivery, commissioning and retention. Separate eligible financed costs from company-funded expenses. A project can be fully funded in total and still run out of cash between a supplier payment and a lender draw. Add a practical buffer for inspection and administrative delays.
Understand what is committed
MetLife describes private debt funding features that can include delayed funding. In a specific proposal, check availability periods, draw conditions, minimum draw sizes and any credit or completion tests. An indicative term sheet is not a binding commitment to advance on a future date.
Market reference: MetLife Investment Management: private debt.
Compare unused commitment with idle cash
Upfront funding may incur interest before the money is used, partly offset by any permitted cash earnings. Staged funding may charge commitment fees or lock pricing differently. Use the same construction schedule for both cases, then repeat the comparison with delays. Do not assume rates will remain favorable until each draw.
Allocate completion and acceptance risk
Identify who bears cost overruns, damaged equipment, failed commissioning and supplier default. Ask when financing payments begin and what acceptance confirms. Equipment finance questions should be resolved before signing delivery certificates, not after an asset fails its operating test.
Market reference: ELFA: questions to ask before financing equipment.
Illustrative example, not a client result
The decision in practice
A facility orders equipment months before opening. The supplier requires a deposit, but the proposed asset financing funds only after delivery and acceptance. A separate bridge or revised payment arrangement is needed. Calling the facility fully financed would obscure that initial cash requirement.
What to prepare
- Supplier contracts and milestone cash schedule
- Draw conditions, commitment fees and expiry dates
- Delay scenario, contingency and source of bridge cash
For an initial conversation, a summary is enough. Share private materials only through an agreed channel.
Common questions
Does delayed draw remove construction risk?
No. It governs funding timing. Completion, cost overrun and performance risks still need to be allocated.
Can a draw be denied after a commitment?
Conditions in the commitment matter. Counsel should review when the provider must fund and what exceptions apply.
Sources and further reading
Our decision framework is CFO Signals analysis. External references describe market practices and products, not an endorsement, partnership or available offer. Terms and eligibility require confirmation for your transaction.