Startup Financial Model for a Loan Securitization Platform or Facilitator

I've done a few different loan business startup models. Some for direct lenders and one for analyzing a single securitization deal, but now I've done something geared towards securitization facilitators and/or servicers (a middleman). This side of the business is a software platform and focuses on building out a network that connects institutions that have baskets of loans they want to liquidate and investors that want to invest in securitized products (secured by baskets of loans).

$75.00 USD

After purchase, the template will be immediately available to download. It is also included in the industry-specific models bundle, the saas / tech models bundle, accounting templates bundle, direct lending models bundle and the Super Smart Bundle.

securitization

This financial model template was designed to meet the needs of an operator who is just starting out and wants to do some financial planning. The primary revenue sources are upfront fees on the notional amount closed, ongoing fees on the principal balance managed, and potentially making a margin on the buying and selling of portfolios.

At no point is this type of operator going to be holding or originating loans nor collecting principal and interest. They are just the aggregator and/or facilitator. The value of this middleman business is making it easy for institutions and investors to connect with deals.

Also, these deals can take time to materialize and all-the-while there are costs that may happen prior to the deal closing. This presents important working capital implications, and the model makes it easy to account for such things with an entry for the average time it takes a deal to close and various fees that happen pre and post-closing.

Template Features:

  • Includes monthly and annual financial statements (Income Statement, Balance Sheet, Cash Flow Statement)
  • Dynamic assumptions to forecast up to 3 types of asset classes.
  • The primary deal assumptions tab has a full 5-year financial summary by it so the user can see how key assumptions affect the bottom line as well as primary financial line-items quickly.
  • Each deal type has its own assumptions for closed deals over time, fee rates, direct costs, and expected principal balance over time (important for fee calculations).
  • Includes a DCF Analysis, Executive Summary, IRR, exit multiple, and other metrics.
  • Includes dynamic full-time-employee (FTE) scaling cost assumptions based on the number of deals per month, headcount required, their salaries, and payroll taxes/benefits.
  • Includes a separate schedule for FTEs that may not scale with operations as well as a fixed overhead cost section for things like marketing and administrative / legal costs, office rent, and the like.
  • The main CAPEX item here would be the initial software development, which is capitalized and expensed over time.
  • The model solves for the minimum equity required and has options for outside investors and inside investors to contribute a portion of that startup capital as well as receive a portion of the profits over time.
  • Optional exit value is based on trailing 12-month EBITDA at exit month.
  • 5-year planner.
  • 22 charts / KPI visualizations.
Deal Assumptions:

In the Excel model, each of the below assumptions has a note in the cell if you hover over it that explains more about the input item.

Deal Configuration
  • Lead Time from New Deal to Closed Deal
  • Average Notional Size per Deal
  • Average Annual Growth of Deal Sizes
  • Average Tenure of Portfolio (in months)
Revenue Drivers
  • Upfront Fee Rate
  • Placement/Distribution Fee
  • Ongoing Service/Management Fee
  • Fixed Ongoing Annual Service/Management Fee
Direct Costs
  • Rating Agency Fee
  • Minimum Rating Agency Fee/Deal
  • Underwriting / Placement Fees
  • Trustee & Administrative Annual Fees per Deal
  • Trustee & Administrative Fees (% of Principal)
  • Trustee & Administrative One-time Setup Fees
  • Accounting / Auditing Fees per Deal
    • % Paid At Deal Start If Any
  • Legal/Structuring Costs
  • Drafting Transaction Documents
  • Setting up SPV (special purpose vehicle)
  • Financial Modeling
  • Tax Advice
  • Legal Opinions
    • % Paid At Deal Start If Any
  • Other Direct Costs Paid Post-Closing per Deal
  • Other Direct Costs Paid Pre-Closing per Deal
Warehouse Bridge / Line of Credit
  • % of Loans Requiring Bridge Financing
  • % of Notional Value Paid
  • % Borrowed via Bridge Line
  • % of Notional 'Placed' (securitized face amount)
  • Interest Expense
  • Closing Costs
Principal Balance Forecast
  • Average % of Principal Defaulted On per Month (60-month curve schedule)
  • Repayment Curve (define % of principal repaid on average per month over 60-month schedule)
My advice is to simply model a single deal, fill out all the assumptions, and then try to follow the logic for why the profit / loss is what it is. You can follow all the logic and formula accordingly. Once you have a good idea of that, it becomes easier to build a sound financial forecast and scale deals over time, while understanding the implications of the various variables.

Acting as a Buyer and Reseller of Loan Portfolios

The model gives the user the option and resulting financial impact of buying some or all of the loan portfolios prior to them being placed with investors and selling them at a profit. This represents a risk where there is an upfront capital requirement (buying the portfolio of loans with equity or debt), holding the loans until the portfolio is 'placed' and then possibly making a profit if the portfolio was purchased from the institutions at a discount and placed with investors through a security that you facilitate at par. It could take potentially many months to place, resulting in interest expenses, closing costs, and the risk of having to hold the loans. Since this would represent a normal operating activity for this business, that margin hits the gross profit line and stays above EBITDA even though you may think it would be gain/loss on sale and go into capital gains. That is not likely the case.

You can easily enter 0% if you don't want to model that activity and just be the aggregator who collects fees and never holds/owns the loans at any point. This type of activity is kind of like buying inventory and you will see line items on the balance sheet that represent it as such. The recognized costs of buying the loans are recognized when the loan deal is closed, and there is an offset for cash flow to properly understand the financial impact and timing implications.

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