Creating a funding rule

You can define a funding order for funding sources, according to the defined flow of funds. For advanced funding orders, you can create tranches and select one or more funding sources to allocate to each tranche. A tranche is a part of the capital structure of a loan.

A funding rule specifies the conditions of usages for funding sources within a tranche. These rules are created and managed as part of the agreement creation, when a deal is finalized to manage portions of the construction or management of the assets life-cycle. These rules are created to balance the ratio of risk or reward for investors and lenders, and ensure that funds are appropriated properly in the lifetime of the deal.

A "tranche" in a capital stack is a specific layer of financing or investment in a company, project, or asset.

Tranches are time or threshold bound distinctions for funding sources and funding rules that are applied to a deal.

Note: Before creating a funding rule, ensure that:

• Full access permissions are provided to Deal Management:

• Portfolio Page & Deal Creation

• Deal Details

• Deal Overview

• Capital Stack

• Multiple funding source must be added to a deal.

• A deal is created.

To create a funding rule, perform the following steps.

1. After creating a funding source, click the Funding Rules tab.

2. Click Edit.
3. To create tranches, turn on the Advanced Funding Order toggle.

Note: To change the funding order sequence for waterfall funding, drag and drop each funding source to the required funding order.

4. In the Advanced Funding Order section, enter the following information.

i In the Tranche 1 Name field, enter a tranche name.
ii In the Select the funding sources for this tranche section, select the required funding source and enter allocation amount or allocation amount percentage.

Note:  

• You can select one or multiple funding sources for each tranche.

• The aggregate Total Amount of all tranches must be equal to the full capital stack amount.

• To delete tranche, click delete .

• To add new tranche, click + Create New Tranche.

• After using all the funds from the funding source, that funding source cannot be selected.

5. Click Save.

Funding rule details are displayed with the newly created tranche.