Due Dilligence Fees

We work with many funding sources worldwide. They do not charge upfront fees (when an applicant is charged money to be accepted as a client), closing fees, contingency fees, processing fees or application fees and there are plenty of companies that do charge those fees, in addition to “retainer” fees to remain as a client of the funding source after you have already been charged upfront fees.

However, it is very important that applicants understand that they are expected to cover the cost of the funding source’s investigative work and travel to their company during the due diligence process.

If a client is not prepared to pay this due diligence fee, then funding sources will not work with them, this is not negotiable.

Funding sources do not give millions of dollars to companies without a due diligence process beforehand. This is not only common sense it is good business sense. Go to a bank, apply for a loan, and see if the bank has you fill out forms, answer many questions about yourself and your company and pay fees related to applying for a loan, before you receive any money, then you'll better understand a due diligence process.

Funding sources verify the accuracy of all information submitted during the funding process and if an applicant has lied and submitted a fraudulent application, which happens occasionally, the project will be declined for funding. No funding source will “guarantee” funding because due diligence is required to verify the accuracy and honesty of the applicant and the applicant’s submitted paperwork, and unfortunately some applicants lie. Again, go to a bank, apply for a loan, and verify that you will go through the exact same process, and pay fees to do so; it is the standard within the public and private banking industries.

Investors are interested in making profitable investments in which the client company and the investor both earn a lot of money. Funding sources will not use their own funds to investigate a project, and operate at a financial loss, neither will banks.

Investments are about calculating the amount of perceived risk and managing that risk, and the due diligence process is about a potential investor finding out about the company seeking funding, the members of its management team, and gauging if the company is a potentially profitable investment. Funding sources’ due diligence fees occur before closing, before funding sources spend money to hire third party due diligence companies, and the applicant is expected to pay these expenses before the funding source begins its due diligence process.

Due Diligence includes but is not limited to the following:

- Civil, Corporate and Criminal Background Checks on all Principals and management team (Key Personnel)

- Investigating the Financial Background of Principals (personal and corporate)

- Accounting Fees - Assigning an accounting firm to run a parallel pro forma and to verify the accuracy of accounting data submitted

- Travel to site and meeting with the principals if desired by the funding source

- Hiring Industry Consultants to help evaluate the potential risk of the investment

- Lien and Title Property Searches

- Consulting of Lawyers for legal matters and preparation of legal contracts

Fees for Due Diligence vary by each individual project, your industry, your geographic location, and the expected costs of accountants, attorneys, industry consultants, etc. They are dictated by the funding source, and are not negotiable. When travel is involved, fees will be higher. The decision of whether or not the funding source requires a face-to-face meeting is optional, decided by the funding source as part of their criteria before approving your project to receive funding, and is not negotiable.

We work with thousands of funding sources worldwide, the fees also vary by funding source, so do not ask me how much Due Diligence Fees are for your project until after a funding source has verified interest in your project, a desire to proceed, and the funding source provides an invoice for the amount of expected due diligence costs, until then we do not know how much due diligence fees will be for your project.

Send an e-mail to me at ceo@hindmarshfinance.com