What's new with CMS
LIBOR rates - Now is the time to take advantage of the currently low 12 month LIBOR rate. This is an excellent time to "lock in" this low rate by obtaining a fixed rate.
CMS II - For those clients who are "asset rich, but cash restricted" the CMS II program was designed to offer the ability to significantly reduce the additional collateral need when a Bank Letter of Credit has greater value being used for growth opportunities. This variation of the standard "loan for life" is an excellent fit for individuals who are heavily invested in Real Estate or a Closely Held Business.
Succession Capital Alliance (SCA), an affiliate of CMS, was created to lend support to the industry in communicating, designing, and implementing the CMS strategy. Our experience in premium financing demonstrates that premium financing is an extremely dynamic and detailed technique. Working jointly with the life agent or advisor, draws from our experience and knowledge to move a premium financing case to closure.
Interest Payment Options - A well designed premium financing program must be flexible enough to adapt to the need and cash flows of the client. With this in mind, debt interest can be designed in several ways:
- Interest in Advance - interest payment paid in advance of funding based on the spread and a variable LIBOR rate that adjusts annually.
- Interest in Arrears - interest payment due the beginning of the second year based on the spread and a variable LIBOR rate that adjusts annually.
- Interest rate Cap - a stated maximum gross rate with any excess accumulated into the loan based on a spread and a variable LIBOR rate that adjusts annually.
- Interest Deferred - interest payment capitalized into the loan (maximum deferral CMS I - 10 years, CMS II - 5 years) based on a variable LIBOR rate during the maximum deferral period. After such period an additional deferral period may be requested of the lender, or interest payments will be based on a spread and a variable LIBOR rate on the current loan balance. After the deferral period has expired and a new one implemented, interest will be due on the current outstanding loan balance.
- Interest Rate Fixed - Annual debt interest may be fixed for the duration of the fixed rate period based on LIBOR plus a spread provided the premium is in excess of $1,000,000 and no further premiums are due during the fixed rate period. The maximum fixed rate period is 10 years.
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