April 9, 2024

Eight Reasons Why Banks are Consenting to C-PACE Financing


Eight Reasons Why Banks are Consenting to C-PACE Financing

Benefits of C-PACE for Banks 

Here are a few ways banks are seeing the benefits of C-PACE:

  • C-PACE in the capital stack enables banks to continue the lending relationship with valuable clients while maintaining a healthy deposit-to-loan balance.
  • For mid-stream development projects that previously penciled but fall short amid tightening conditions, C-PACE fills gaps in the capital stack to get deals back on track.
  • C-PACE can be ideal rescue/gap financing and as spreads have come down, it is even more competitive to mezzanine and private debt from bank-competitors.
  • C-PACE is non-recourse financing that cannot be accelerated, preserving the bank’s lead position in the event of loan defaults.
  • C-PACE financing does not require inter-creditor agreements, keeping administration manageable.
  • C-PACE financing is applicable at any time during the property lifecycle ranging from new construction to retroactive financing.
  • Escrowing for PACE payments is recommended alongside escrow for insurance and taxes. This helps ensure that the PACE stays current and security position is maintained.
  • C-PACE loans can transfer upon sale of a property or be pre-paid at any time.