The Hornet Debt Fund is a 506(c) fund. Its sole revenue source is asset-based lending, primarily in Central Texas. The loans originated from the fund are short-term and high-interest to real estate developers, flippers, and investors that need a fast, flexible lender to help them get a deal done quickly. The collateral of the loans is real estate property and the target loan-to-value is 70%, leaving the remaining 30% equity as buffer to account for market shifts, borrower performance issues, or other factors, to help keep the risk threshold low.
Hornet funds acquisition, construction, and sometimes interest reserve or working capital if the equity in the collateral is high enough. Most loans are 18 months or less and average around 12.5% interest. The fund is un-levered, which means it has no debt of its own. This also allows investors who are using qualified IRA or 401k funds to avoid UBIT/UDFI tax.
Investors in the fund receive a 9.6% preferred annual rate, paid out monthly. They have the option to reinvest their monthly return which would result in an annual compound interest of 10%. If there is ever a month where revenue isn’t enough to achieve the 9.6% preferred rate then it will be made up in subsequent months if the revenue is higher.
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Hornet Capital is based upon a foundation of transparency. Upon execution of an NDA, potential investors may gain access to a more in-depth Investor Dashboard that breaks down the data below in more detail, as well as provide other insights and financials about many aspects of Hornet’s operations.