Binder 2 of 4 · separate from the narrative
Financial model
The lender needs to see the money: unit economics, utilization, base / conservative / severe, and DSCR. This is the workbook view. The story stays in the business plan.
Gross ITL
$5,000,000
90% guaranteed
$4,500,000
Illustrative P&I
$64,020/mo
1.25x DSCR needs
$960,300
Use of proceeds
Matches the $5M nothing-left-out schedule. Land, 30,000-SF building, and site are 504-eligible. Working capital inside an ITL stays at or under the $2 million cap. Cash equity of at least 10% of total project costs is additional — the ceiling is not quietly raised.
| Item | Amount | ITL rationale |
|---|---|---|
| 12-acre land acquisition | $600,000 | Master-planned from Day 1. $50,000/acre is a target, not an appraisal. Replace with a contract and environmental. |
| 30,000-SF factory building | $850,000 | $28.33/SF. That is a used or relocated metal building / existing industrial purchase — not new Class A construction ($90–$150/SF would blow the ceiling by itself). |
| Site development / utilities / yard | $300,000 | Production yard first, pretty parking last. Stormwater, truck drives, utility taps, fencing. |
| Manufacturing equipment | $900,000 | Every Phase-1 machine that turns purchased inputs into a house. No EPS molding plant. No fiber laser. No robotics. |
| Material handling / cranes | $175,000 | Gantry/jib, not a $400k bridge-crane package. Forklifts used/late-model. |
| Trucks / trailers / field erection fleet | $300,000 | Two used tractors, trailers, pickup, telehandler, mini-ex, skid steer. Mobile crane is contracted, not owned. |
| Engineering / product development | $250,000 | PE stamps, typicals, BOM, first-article engineering. Not a year of a 12-person engineering department. |
| Certification / testing / code approvals | $150,000 | Louisiana first. 50-state matrix started. Accredited-lab tests. Not 50 certificates on Day 1. |
| Technology / BIM / ERP / MES / QMS | $100,000 | Digital thread starter stack. Seats and servers, not a custom MES build. |
| Initial inventory / materials | $300,000 | Safety stock + first-article houses. Not a quarter of national volume. |
| Core executive / engineering payroll during startup | $400,000 | Not a year of $200k–$300k elite salaries. Founder draw + CMO launch contract + CTO + controller + quality + production supervisor, with burden. |
| Insurance / legal / accounting / permits | $125,000 | GL, product, WC, auto, property, inland marine, umbrella, cyber, entity work, CPA, permits. |
| Operating / working-capital reserve | $550,000 | Payroll float, utilities, receivables lag, crane rental, oversize permits, warranty, surprises. This is how the plant actually operates. |
| Total ITL | $5,000,000 |
9.25% (illustrative; statutory cap is base rate + 3.0% on loans over $350,000)
Year-three utilization cases
Base 72 homes (75% of one line, two shifts). Conservative 48. Severe 24 — full P&I is not covered. That case is in the file on purpose.
| Case | Homes | Revenue | EBITDA | DSCR | 1.25x? |
|---|---|---|---|---|---|
| Base — 75% of one-line two-shift capacity | 72 | $9,414,000 | $1,788,660 | 2.33x | Yes |
| Conservative — 50% utilization (one-shift run rate) | 48 | $6,876,000 | $1,083,000 | 1.41x | Yes |
| Severe downside — 25% utilization | 24 | $4,168,000 | $330,000 | 0.43x | No |
- The underwriting case for THIS $5M line (~6 homes/month). Mix-weighted housing ASP ~$102k. Other/affiliate revenue is a placeholder until contracted. 20 homes/month is a later second-line file.
- About 4 homes/month. The other/affiliate column in this table is a placeholder until there is a PO. Do not treat Paparazzi marketing receipts as factory cash flow.
- Full P&I is not covered. This is why the loan is drawn to equipment invoices, with a 12-month interest-only period and a stop on further draws if offtake is not in house. Do not rely on Paparazzi marketing cash flow as if it were plant DSCR.
Five-year operating model
Treat the other/affiliate column as a placeholder. Do not insert Paparazzi Marketing Group LLC marketing receipts as if they were factory sales. Module units are factory invoices to developers, not retail closings.
| Year | Other / affiliate* | Modules | Units | Revenue | EBITDA | Debt service | DSCR | Jobs |
|---|---|---|---|---|---|---|---|---|
| FY2027 | $1,650,000 | $2,280,000 | 24 | $3,930,000 | $432,300 | $384,120 | 1.13x | 28 |
| FY2028 | $1,880,000 | $4,704,000 | 48 | $6,584,000 | $1,053,440 | $768,240 | 1.37x | 42 |
| FY2029 | $2,070,000 | $7,344,000 | 72 | $9,414,000 | $1,788,660 | $768,240 | 2.33x | 54 |
| FY2030 | $2,200,000 | $9,180,000 | 90 | $11,380,000 | $2,276,000 | $768,240 | 2.96x | 62 |
| FY2031 | $2,310,000 | $11,016,000 | 108 | $13,326,000 | $2,798,460 | $768,240 | 3.64x | 70 |
- These figures are a lender-ready operating model for a new manufacturer, not the proposed manufacturer historical books. The ‘other/affiliate’ column is a placeholder and must be replaced with documented contracts or zero before a bank will credit it.
- FY2027 debt service is modeled at interest-only / partial amortization during line installation (50% of full P&I). Full $64,020 monthly P&I starts FY2028.
- Module ASP is factory invoice to developers (~$95,000 in FY2027, rising with mix), not retail to homebuyers. The proposed manufacturer stays a manufacturer, not a merchant builder, which keeps NAICS in 31–33.
- Do not present Paparazzi Marketing Group LLC revenue as the proposed ICF manufacturing company factory sales.
- Gross margin 28–34% is a designed ICF module BOM, to be replaced with prototype actuals.
- DSCR uses EBITDA as a simplified proxy. The lender will use EBITDA ± owner add-backs − taxes − unfinanced capex. A CPA compilation should rebuild this from the actual returns.
If you need more than $5 million
504 + ITLExample $12.5 million owner-occupied plant (land and building only) plus the $5 million ITL for equipment and working capital.
504 finances the factory and long-life equipment — permanent American manufacturing capacity. ITL finances the production line, modernization, and working capital (≤ $2 million). Do not finance the same assets twice.
FY2026 manufacturing fee advantage (not the reason for the loan): For qualifying manufacturing 504 loans in FY2026, SBA set the upfront fee and the annual service fee at 0%. Window: October 1, 2025 through September 30, 2026. Illustrative SBA guarantee-fee contrast on a $5 million debenture: about $25,000. Not the reason for the loan. An additional economic benefit of financing the manufacturing expansion now, if a CDC can still obtain SBA approval inside the window.