Capital Disbursement is a common area of inquiry from partners during the loan process. The article covers information about when to expect funds to be available for disbursement, the requirements and documentation needed for receiving funds, and where those funds go. Please read this article carefully to ensure that you experience no delays or confusion during this phase of the project.
Requesting a Disbursement
All Wunder loan contracts have a specified Capital Access Date, which defines when loan funds will be request-able. When a loan becomes eligible for disbursement, the borrower will see a blue 'Request Disbursement' button. This button will appear when:
- The loan has passed its Capital Access Date
- The borrower has successfully connected and verified a payment account
Creating a disbursement request will require that the borrower choose an eligible beneficiary and upload an invoice. If the borrower doesn't see the beneficiary to which they wish to send funds, please contact us and we will add them to the loan. The amount requested should match the amount owed on the invoice and the invoice should also be written to the borrower of the loan. When the disbursement request has been made, a Wunder admin will have to approve it. Requests will not be approved until:
- All conditions precedent have been completed (see "Conditions Precedent")
- Sufficient evidence of the milestone having been reached has been provided. For the majority of loans, this 'milestone' is substantial completion of the project.
Beneficiaries of Funds
Wunder offers asset-backed loans to eligible solar systems. As such, proving that loan funds were indeed used to build the system that we are claiming as our collateral is a very important part of the disbursement process. All loan funds are released in response to an invoice that explicitly articulates the use of proceeds and identifies the borrower as payer and the primary contractor as payee. When the loan on a project becomes disbursable, a Wunder representative will provide details on invoice requirements.
Fund Transfer Process
Wunder batches all approved disbursement requests on a weekly basis and transfers the funds via wire. Each Wednesday, any disbursement request that has been approved by both Wunder and the borrower will be included in that week's batch. The movement of funds between our internal accounts will be initiated on Thursday and the beneficiaries of funds for each disbursement should receive their payment on Friday.
In order to ensure that the disbursement request makes it into the weekly batch, the borrower should strive to submit their request by close of business on Tuesday. Any requests that do not make it into the weekly batch (i.e. are approved on Thursday or Friday) will roll over into the following week's disbursement.
If the recipient of funds cannot accept wire transfers, it is incumbent on the borrower to let us know and we may be able to send funds via ACH transfer (please note that this process takes quite a bit longer)
Conditions Precedent are an important part of the disbursement eligibility process. After the loan on the project has been contracted, there may still be a number of items that need to be completed or documents that need to be provided in order for the loan to be "disbursable". These are called Conditions Precedent to Disbursement or Disbursement Conditions. Depending on which Milestone Payments the project was eligible for (this will be articulated in the loan contract package) this list almost always includes some form of proof that a project stage has been reached. Ask your Wunder contact for more information about what milestone evidence is needed for your loan. Other common conditions precedent include proof of system insurance, EIN documentation for all loan payers or recipients of funds, final engineering designs, etc.
Outstanding Conditions Precedent is the most common reason for delays to the disbursement process. If unsure about whether any exist on a loan for a specific project, please reach out to your Wunder contact.
Disbursement & Billing
While the Capital Access Date defines when funds will be available for disbursement, a loan's Term Activation Deadline sets the timeline for the loan's billing schedule. Any funds that are released after the Capital Access Date but before the Term Activation Deadline will accrue interest at a construction interest rate. During this period, the borrower will be charged monthly for interest accrued on disbursed capital.
However, once the Term Activation Deadline is reached, the loan must enter its long-term amortization schedule and the borrower will begin making full payments of principal and interest on the entire contracted loan amount. If 100% of principal is disbursed before the Term Activation Deadline is reached, then the loan will 'activate' (enter it's long-term amortization schedule) on the day that the last remaining funds are disbursed.
Generally, the Term Activation Deadline should be set to the date on which the project expects to reach PTO. For projects that are receiving PTO-only disbursement, the Term Activation Deadline might be very similar to the Capital Access Date.