MULTIPLES LENDING PROGRAM
Offered to select clients and industries since 2005, our "Multiples Lending Program" is based on multiples of the amounts already raised for the project by the borrower. As the project owner, you are required to bring a minimum amount of funds to the project (at least 25% of the total costs), and we can lend you multiples of that initial amount to fulfill the budget. Depending on the project and our assessment of the risk of the project, the multiple offered could be anywhere from 1X of that initial amount, to 4X (though 3X and 4X is the most frequent).
The minimum amount of funds needed to be raised to qualify for this program is be the equivalent of $10M USD or $10M Euro. This minimum makes it very difficult for us to work with projects with budgets of less than $20M USD, unless they are part of a slate. We have some alternate solutions available for smaller projects, but to qualify for a "multiples" based loan, small stand-alone projects rarely fit easily into this program.
The basic methodology of the Multiples Program is that your initial funds are set aside in safekeeping, usually in your own lawyer's trust/escrow account, which allows us to generate the multiples of your initial amount that become your loan. When your funds are held in your lawyer's trust/escrow account, this shows our regulators that the appropriate amount of funds have been "set aside" in safekeeping by the borrower. From there, our bank expands our existing credit lines and we use that additional credit to furnish your loan.
NOTE ** There are no direct ties of any kind between the borrower and our credit lines - FundingNet is solely responsible for the repayment of those credit lines to our banks. We simply lend those funds to you and to your project as a private loan, between private entities.
If your initial funds have been provided by a 3rd party investor/lender who wants those funds returned prior to the repayment of your loan, then you should structure your project and application package in such a manner that you can repay the investor from your loan disbursements. Note that the multiple that you will be approved for may not necessarily be the same as the multiple that you requested - all projects are assessed on a case-by-case basis.
There are several methods available to our borrowers that ensure their initial funds are positioned appropriately throughout the loan term. All deposit options fully guarantee the safety of the Borrowers capital. To see how your funds are safely protected against all perils, please see the "Financial Safekeeping" heading on this page, below.
TO QUALIFY FOR FUNDING:
To be eligible for funding, your project must fit the following criteria, in full:
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Your project must have the production elements established. A fully developed business plan must already be in place. If you only have a script but no budget or production plan, you are not yet ready to be funded. Your project doesn't necessarily have to be ready to produce immediately, but it should be basically ready to go.
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Minimum funds already raised. There must already be at least the equivalent of $10M USD/Euro ready to deploy into the project, or slate of projects. As a requirement to qualify for our funding multiples, those initial funds must sit idly on the sidelines throughout the loan term, either in your own bank account or in the keep of one of our regulated custodial banks.
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Timing. All FilmCabbage loans must be approved through banking compliance, a process that takes approximately 60 days. If you require funds immediately, and cannot wait for compliance confirmation, your project will not qualify. Additionally, our funds are released in traunches as they are consumed into the production, so it takes 8 to 12 months for them to be fully deployed. If you require all funds on day 1, we may still be able to assist you, though the process may take a different directing, and see you working directly with one of our banking partners.
INTEREST RATE
FilmCabbage offers borrowers an industry leading interest rate - not only do we provide you with up to 4X multiples of the amount of your capital as a credit facility, but we do it at very reasonable rates. If your loan is a 3X or 4X multiple, your interest rate will be "SOFR + 2.5%". The current SOFR rate is top of the page linked here:
If your loan is a 2X multiple, your rate will be "SOFR + 1.5%". And if your loan is a 1:1 loan (more thoroughly outlined on the page "Investor Protection Program") your interest rate if "SOFR + 1.25%".
RISK MITIGATION
We have designed our loan process in a way to ensure that your initial funds never exposed to ANY risk. In fact, your initial funds will sit safely on the sidelines, usually YOUR lawyer's IOLTA/Trust account, throughout the entire loan process.
To apply for funding for your Entertainment Project, you will need to submit an application package, but prior to doing so you should first contact us to discuss your project and review its business plan to make sure that it appears to be a good fit for our program. If it appears to be, we will provide you with all of the required documents to submit to complete your application package.
Once your application package is submitted, we have our intake and risk assessment teams review all elements of the submission. If your project is accepted, you will receive a comprehensive Term Sheet that outlines the loan terms, including the LOAN MULTIPLE that you have been approved to receive. Our issuance of this term sheet confirms that we're "in", and willing to fund your project - as long as the loan terms are acceptable and the process steps are followed from that point, your project is a go.
FilmCabbage loans do not require any additional corporate or personal guarantees - each loan is secured only by the actual project that our money is helping to create. You are not required to secure the loan with any additional personal or corporate assets. There are also never any up-front fees.
FEES
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No Engagement Fees
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No Due Diligence Fees
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No Application Fees
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We pay our own costs, and you pay yours. As is standard for any loan, as the borrower you will be responsible for the legal costs of closing the transaction. Closing costs will be disclosed in your Term Sheet, and a minimum amount will be due to our appointed law firm (after your project has been assessed and accepted, and both parties have agreed to the loan terms) in order to complete the contracts and close the deal.
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There will be a 3% "Lending Fee," due AFTER formal "close" of the deal and commencement of loan disbursements. This fee is deducted from the loan funds themselves - never from your original capital.
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Throughout the loan term there will be a small monthly accounting fee for a loan oversight custodian who will reconcile the costs of the production to the funds drawn, confirm that the project remains on schedule, and monitor the repayment of principal and interest. This fee will be fully described in your Term Sheet.
HOW TO APPLY
The process to apply for and receive financing from FilmCabbage is as follows:
STEP 1: Contact us to discuss the details of your project so that we can determine if it suits our lending model. If it does, we will provide you the applications and documents you'll need to apply for a loan.
STEP 2: Submit your project's "Pre -Approval" package. The items required are:
1. Proof of funds
2. Funds Owner's KYC information (we will provide the form to complete) and copy of passport
3. Executive summary of the project to be funded.
4. Proposed drawdown schedule / use of funds schedule.
With these items, we will be able to determine if we can furnish your laon and, if we can, we will provide you with a formal "Loan Offer". If you accept our offer, we would move the step three.
STEP 3: Submit your application package. This will include (in addition to the documents already provided in the "Pre-Approval" stage:
1. Full Project Business Plan
2. Loan Application Form (we will provide the form to complete)
3. Initialed and signed FAQ document
4. If the borrowing entity is a corporation, provide the Articles of Incorporation.
5. If the borrowing entity is a corporation, we require a Board Resolution (stating the signatory for the company has the ability to bind the corporation to contracts).
6. Letter From the Investor Posting the Initial Funds (if applicable)
STEP 3: If your project is accepted for funding, you will be sent your comprehensive "Term Sheet" which outlines the primary terms of the loan. Once both parties have agreed to terms, both parties sign the Term Sheet to proceed to the next step.
STEP 4: POSITIONING OF FUNDS IN SAFEKEEPING
There are a couple of ways to accomplish the positioning of funds in safekeeping. The primary method is to have your own attorney hold your initial funds in their IOLTA / Trust / Escrow account. Your lawyer must be able to follow our protocols in order to show our bankers the funds are positioned appropriately. If you don't have an attorney that has the ability to hold large sums in trust for the required length of time, we have attorneys we can refer you to. If you use your own attorney, you will be responsible for paying them any fees or charges associated with them holding oyur funds in escrow. If you use an attorney we refer you to, FundingNet/FilmCabbage will cover those costs.
There are alternate ways place your funds into safekeeping, though the lawyer escrow is the quickest, cleanest and usually the preferred method for clients. However, please see the section "Financial Safekeeping" below, which explain the alternate methods available.
Once your initial funds are positioned appropriately, there is a 60-90 day compliance period where our insurers and banking regulators examine and approve the loan file and complete any required underwriting.
STEP 5: During the compliance confirmation, we create the Final Loan Agreements for your signature. All borrowers will be required at this time to pay the minimum closing costs amount with our paymaster (who will use those funds to retain the law firm that will close the loan for us) in order to develop these contracts.
STEP 6: Once compliance clearance has been complete, your loan facility is opened and disbursements commence per your loan contract.
FINANCIAL SAFEKEEPING
The key element of this FilmCabbage program is the requirement that to qualify for a loan, a minimum of 25% of the total budget must already be in place. It is the existence of the borrower's project, coupled with those initial funds already being set aside in a regulated environment, that makes the multiple that we lend to them possible.
The only requirement of those initial funds is that they remain in safekeeping throughout the loan term. If those funds were to become otherwise encumbered or depleted in any way, it would violate compliance requirements and cause the loan to collapse. As a result, to ensure compliance with all banking regulations as well as similar requirements from our insurance partners, there are specific methods and oversight required to guarantee that those funds will remain positioned appropriately throughout the loan term.
Below are the approved methods for this safekeeping assurance that are currently available. All of these methods have been designed to specifically ensure our clients/borrowers that their funds are fully guaranteed and secure at all times.
METHOD 1. THE BORROWER'S INITIAL FUNDS ARE HELD IN A LAWYER'S TRUST/ESCROW DURING THE TERM OF THE LOAN.
The initial funds are moved to the trust account of their attorney, where they must remain for the duration of the loan. The attorney must be able to hold large amounts in trust for extended periods of time, and must be able to furnish FundingNet with a letter we require to present to our banks to show the funds are positioned in a manner that will allow them to extend our credit multiples to us.
If the borrower does not have a lawyer capable of this, we can refer them to attorneys that can, who will work with them to position the funds appropriately. When the borrower uses their own lawyer, they are responsible for any escrow fees/charges tat their lawyer will charge for the service. If the borrower uses a lawyer we refer them to, FundingNet will cover any costs for the escrow service that may be charged.
METHOD 2. BORROWER (or other provider of the initial funds) HOLDS THE FUNDS IN THEIR OWN BANK ACCOUNT IN THEIR OWN TOP TIER BANK.
Under this method, the funder sets up a new sub-account in their bank (under their existing business accounts) in a manner that will work for the loan deal. FundingNet will provide the name the account would be listed as (which will be a SPV specifically set up for the deal) and the funder retains total control of the account. Only the funder will have signatory access to the account to be able to do anything with the funds. This method is the cleanest and most economical, as it only costs the funder the cost of setting up a new account as sub-account of existing. Setting it up as a sub-account of their existing bank accounts will make it clean and efficient with their existing top tier bank, as they are already doing business with that bank.
METHOD 3. SBLC or BANK GUARANTEE – MINIMUM $10M USD/EUROS or GREATER (initial funds remain in borrower's bank account, and a SBLC / BG / CD issued by their bank)
Utilizing this process we can ONLY work with Top Tier Banks in highly stable banking jurisdictions.
Under this method the borrower/investor's capital will remain in their bank account, and that bank would issue to the Bond Group's assigned bank a “banking instrument” such as a “SBLC” (Standby Letter of Credit) or “BG” (Bank Guarantee). The banking instrument would be set up as a "returnable instrument", so the issuing bank has a full guarantee that it will be returned in full value and without encumbrance at the end of the term. Your own bank will be able to offer you the appropriate assurances that your capital is completely secure at all times.
Keep in mind that the issuing bank will charge fees (often substantial ones) to create, issue, and eventually recall and liquidate these instruments, and those costs will be fully the responsibility of the borrower. Both banks (issuing and receiving) will set up the transaction in as way that the SBLC/BG will be held by the receiving bank until the loan is repaid in full; at the end of the term it will be returned in full value and without encumbrance. This will likely require the Borrower to obtain extensions on the instrument used.
SBLCs/BGs are typically discounted by the receiving bank (as the funds are not held in their institution). In most cases the value of this instrument will be discounted to 80% of the face value, and the amount of the loan multiples based on the discounted amount. The discounted amount will also be bonded via the same banks/securities companies, so the discounted amount will also receive the monthly payout of their 5% annual interest on the discounted amount.
Please note: this process is meant for clients that have a high level of sophistication in banking and finance, and who will deal directly with bankers who have extensive experience in setting up such instruments.
METHOD 4. RATHER THAN CASH, THE BORROWER HAS A TOP CRYPTO CURRENCY TO USE AS THEIR INITIAL FUNDS.
Another method that can be used is for the borrower to use a top crypto currency, such as Bitcoin or Ethereum. We CANNOT work with anything other than the top few crypto currencies. The borrower then (with the assistance of our bankers) would move that crypto into a digital wallet with our bank (which will always be a top tier bank like HSBC, Barclays, TD, etc). The details of how that would be handled to ensure to the client that their crypto is at no risk of loss will be covered between them and the involved bank.
METHOD 5. RATHER THAN CASH, THE BORROWER HAS GOLD HELD BY A TOP TIER VAULTING COMPANY.
In this situation, the borrower (or their investor) would own gold that is vaulted with a top vaulting company (such as Brinks, G4S, etc.) in a highly reputable jurisdiction. The owner of the gold would have their vaulting company issue a SKR (safekeeping receipt) for the appropriate value of the gold, for the length of the loan term. Your vaulting company will be able to describe how SKRs work, and how this does not in any way put those assets at any risk.
Details of how this would be handled are available on request.
PLEASE NOTE **
For all of the methods described above, FundingNet / FilmCabbage will credit the depositor at a 5% per year rate for the entire time that the "QC" remains Bonded on deposit, to ensure that the client minimizes their lost opportunity cost. This 5% will be applied to the principal outstanding on the borrower's loan.
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FundingNet / FilmCabbage have designed these safekeeping processes using best in partners and processes to mitigate risk and guarantee the complete security and safety of ours and our clients' assets, while adhering to all required compliance and legislative requirements. Each of the processes described offer a full 100% guarantee of the safety and security of all funds in our program, each of which is fully verifiable.
If you have any questions about FilmCabbage's safekeeping processes, please contact us today.
Click the link below for a 'flipbook' highlighting the major elements of our Multiples Program:
https://online.fliphtml5.com/hwjaf/lgqh/#p=1