Case Study: SBLC for a Texas Solar Developer Without 100% Cash Collateral

Case Study: SBLC for a Texas Solar Developer Without 100% Cash Collateral

Case Study: SBLC for a Texas Solar Developer Without 100% Cash Collateral

A Texas solar company needed a bank issued Standby Letter of Credit to satisfy counterparties and hit milestone dates. The issuing bank initially demanded a full cash block. That would have drained the sponsor and delayed construction. We arranged an alternative structure that cleared compliance, protected the bank, and kept the developer’s liquidity intact.

Outcome: SBLC activated with a 400K cash requirement after structured underwriting and a collateral provider pledge over a portion of PPA revenues. Sponsor paid about 200K premium for activation. Entire process completed in 58 days.

Deal Facts

Parameter Details
Client Utility scale solar developer in Texas
Instrument Standby Letter of Credit issued by a commercial bank
Initial bank ask 100 percent cash collateral
Final cash posted 400K cash with additional non cash collateral support
Collateral provider consideration Pledge over a portion of PPA revenues
Activation premium About 200K paid by sponsor to activate the SBLC structure
Time to complete 58 days from mandate to SBLC activation

The Challenge

Liquidity pressure
A full cash block would have slowed construction and strained vendor payments.
Bank risk policy
Issuing bank wanted hard collateral due to project stage and counterparty risk.
Multi party contracts
PPA, EPC, interconnection, and O&M had to be read together to size risk.
Deadline risk
Milestones and liquidated damages did not allow for a long collateral hunt.

What We Did

Arranged collateral support
Sourced a provider prepared to back the SBLC in return for a pledge over a portion of PPA revenues.
Structured the facility
Mapped the payment waterfalls and reserve mechanics to show bank coverage without full cash.
Underwrote the contract stack
Reviewed PPA, EPC, interconnection, and O&M to identify covenants, cure rights, and stress points.
Negotiated with the bank
Presented a risk memo and cash flow model. Achieved a reduced cash requirement of 400K.

Final Structure

Element How It Worked
SBLC issuance Commercial bank issued SBLC after review of underwriting memo and revised collateral package
Cash component Sponsor posted 400K cash instead of a full cash block
Collateral provider Third party provided additional support and received a pledge over part of PPA revenues
Activation premium Sponsor paid about 200K to activate the structure and secure timing
Bank comfort Security tied to revenue pledge and tighter covenants on reporting and reserves

Underwriting Highlights

  • Cash flow model aligned PPA revenue timing with reserve and SBLC obligations
  • Covenant set covering DSCR triggers, information rights, and cure periods
  • Inspection of EPC terms for LD exposure and practical cure mechanics
  • Confirmation of interconnection timing and commissioning milestones
  • Pledge language limited to a defined slice of PPA revenue with waterfall priority

Timeline to Activation

Phase Work Completed Elapsed Time
Days 1 to 10 Mandate, KYC, document intake, preliminary structuring 10 days
Days 11 to 28 Contract underwriting, collateral provider onboarding, draft pledge terms 18 days
Days 29 to 45 Bank negotiations, covenant set, reserve mechanics agreement 17 days
Days 46 to 58 Final approvals, cash post of 400K, activation premium payment, SBLC issuance 13 days

Results

Liquidity preserved
Sponsor avoided a full cash block while meeting counterparty security requirements.
Bank comfort achieved
Risk reduced through revenue pledge, clear covenants, and a realistic reserve plan.
Deadline met
SBLC activated inside 58 days so construction timelines stayed intact.
Clean governance
All parties had documented triggers, cure periods, and reporting duties.

Need an SBLC without freezing your cash

Send your contract stack, SBLC draft, and timeline. We will propose a collateral route, a covenant set the bank can accept, and an execution plan that fits your milestones.

Start the Process

This case study reflects a real engagement with identifying details adjusted for confidentiality. Any financing or collateral arrangement is subject to independent credit approval, KYC and AML checks, and executed documentation. Terms vary by counterparty, market conditions, and project profile.

Get Started With Us

Submit Your Deal & Receive a Proposal Within 1-3 Working Days

Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.


All submissions are promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.

Express Application Submit Your Deal
Request a Proposal
Request a Proposal / Submit a Deal

Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.

Trade Finance

Tap into solutions like letters of credit, bank guarantees, and payment facilitation. We address the challenge of global transaction risk through structured strategies that foster cross-border growth. Complete the form to unlock streamlined funding aligned with your commercial objectives.

Submit a Request

Project Finance

Access non-recourse funding for infrastructure, renewable energy, or other capital-intensive ventures. We mitigate capital constraints by isolating project assets and focusing on risk management. Provide your details to receive a structure that drives growth and maximizes returns.

Submit a Request

Acquisitions

Secure financing for business or real estate acquisitions. We ease transaction hurdles by reviewing cash flow, synergy opportunities, and exit plans. Complete the form for a customized proposal that supports your strategic investment objectives.

Submit a Request

For Banks

Financely assists banks facing Basel III pressures by distributing trade finance deals and providing collateral for letters of credit. We reduce capital burdens while preserving client relationships and fostering service expansion. Submit your request to optimize your trade finance offerings.

Submit a Request

Once we receive your submission, our team will review your information to determine feasibility. If eligible, you will receive a proposal or term sheet within 1–3 business days. Visit our FAQ and Procedure pages for more information.

Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.

Still Have Questions? Schedule a Consultation

If you still have questions after visiting our FAQ and Procedure pages, we invite you to book a paid consultation for personalized guidance. A $250 USD fee applies per session.