USA Loan Classification
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DrStrangeLove
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Do you mean, like, zero-coupon bonds? They're loans of funds with no interest and no principal repaid until maturity.
Not exactly. The issue is in Thailand every loan has to be issued with an interest rate. Therefore, just wondering how we can issue an interest rate to a client without them having to actually pay the interest or the min payments. Just the principal back at the end of maturity. However, I still want the interest to show up on the balance sheet as accrued and deferred, but at maturity those accounts will clear.
DrStrangeLove
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I can't think of a loan per se that would fit your needs. But there might be equity structures that would achieve your goal.
You could do it with a joint venture or SPV with a specified maturity date. You inject capital for the company's use, which it then repays at the end of the term.
You could do it with a sukuk denominated in the right currency (THB, USD or whichever), if your client is comfortable with Islamic financial products. You might need to look to Singapore, Malaysia or Indonesia for examples of how to structure it. Or you could combine an already-packaged sukuk with a currency swap, if your client needs THB and you can't find a sukuk in-country.
I'm spitballing, so these may not work/be available. But they might. You'd need to consult legal folks.
You could do it with a joint venture or SPV with a specified maturity date. You inject capital for the company's use, which it then repays at the end of the term.
You could do it with a sukuk denominated in the right currency (THB, USD or whichever), if your client is comfortable with Islamic financial products. You might need to look to Singapore, Malaysia or Indonesia for examples of how to structure it. Or you could combine an already-packaged sukuk with a currency swap, if your client needs THB and you can't find a sukuk in-country.
I'm spitballing, so these may not work/be available. But they might. You'd need to consult legal folks.
I wish I could consult with legal folks here, but Thailand isn't really full of professionals who think outside the box. If it isn't necessarily in the "handbook" from the days back in college, it "can't be done."
Is there a reason why a 0% interest deferred loan wouldn't work? i mean are loans required to be structured to have a min monthly payment?
I actually do like this idea. SO, let me give you an example of how this would play out in theory:
There are no Limited partnerships in Thailand. Everything is viewed as a corp entity...even an LLC taxed as a c-corp. Anyway. Let's say T1 (company) is set up in Thailand and then sets up another business called T2. T2 raises $300,000 to inject in to B1 (which is just another business with no association to T1 and T2) for 3% revenue shares. B1 does $6,000,000 in revenue and pays T2 $180,000 as per the revenue share agreement contract. T1 then has a deal with T2 to pay them 30% of the revenues shares that is received from B1 as a consultancy fee, because they are advising T2 how to do business. Therefore, the investors in T2 receive the other 70% of rev share at the end of year (dividend) that T2 has collected from B1.
This literally is structured as a GP and LP fund just like in PE but is different due to the lack of company registration options in Thailand. The T1 company is the GP and the T2 company is the fund with LP's and B1 is the investment that T2 makes, but instead of equity it is revenue sharing.
Therefore, in this example is there a way to inject the $300k in B1 that does not have to accrue any interest or make payments on the "loan" as the $300k cannot be classified as an injection of capital because there is no equity involved?
Would be really thankful for some advice.