In our continuing efforts to continually improve our lending program, FundingNet and FilmCabbage are excited to announce an update to our process for clients participating in our 4-1 Lending Program. This is our program where, if you have already raised at least 20% of the funds needed to finance your project, we can lend you the remaining 80% to complete it.

Previously, your project's initial funds could be brought into the program in two ways - via a deposit into escrow with our appointed law firm, or (if the funds were substantial enough) by issuing an appropriate bank instrument (SBLC or Bank Guarantee) from a top tier bank. Those initial funds (or bank instruments) would be held through the drawdown of our loan funds before being released back to the account of origin once the loan was fully disbursed. Our new process, effective immediately, is quicker, more streamlined and always leaves you (the borrower) in possession and in total control of your own initial capital.

** Please note - the process outlined below is for deals where the client's initial funds amount to $10M USD or more.

Rather than move your initial funds out of your control and into a lawyer's escrow, you (the borrower) will instead simply leave your funds in your own bank account (as long as it is an appropriate top-tier bank in an acceptable banking jurisdiction). If you require assistance to set up such an account, our banking compliance people can help you. You would now simply need to leave your initial funds in that account, completely undepleted and unencumbered, throughout the banking compliance period and until our loan funds are fully disbursed (usually across 9-10 monthly tranches).

You always maintain full, unconditional control of your funds, in your own bank account. The only requirement is that one of our banking compliance officers will need to be added to the account, in a read only capacity. This is required so that when we submit the file to the banking compliance process it will show our compliance officer as being named on the account, and it also provides that officer access to confirm the contents of the account at their discretion. It is important to note that our officer will never have any control of the account or the contents. They will only be able to view.

In some banking jurisdictions this is very simple, as they allow “read only access” to client bank accounts. In other jurisdictions it is a bit more of a process, as they do not allow that type of addition and our banking officer would need to be added as a “signatory”. You keep the same level of security though, as in those cases you will have your bank change account accesses so that any movement of funds require multiple signatories. This ensures that our officer can never have any ability to cause the movement of funds. This is a fairly straightforward change/setup, and your own banker will confirm the security of the account and the contents.

Please note. The client's initial funds must remain undepleted and unencumbered throughout the full compliance and drawdown periods. If any funds are moved out of the account or used to collateralize any other deal or bank instrument during that time, it will cause an immediate Event of Default and result in the termination of the loan and repayment will immediately be due. Upon issuance of the last tranche of our loan (so that all loan funds are fully disbursed) your initial funds are again fully available to be used to complete the project, or dispositioned as required by the client.

Loans where the initial funds (the client's 20%) are less than $10M will still need to be placed into a lawyer's escrow, under full escrow agreements and covered by the law firm's escrow insurance. However if smaller deals would like to take advantage of the $10M+ ability to leave funds in their own account, we recommend working with other filmmakers to pool projects into a slate so that their cumulative initial funds are in excess of $10M. They can create a common account with all of their initial amounts in it, and if they are $10M+ the funds remain in that account to generate all of the loans for the various projects. FundingNet is able to set up each project's loan separately (even though their funds are pooled in a common account) so that each project remains separately collateralized and projects that make money are not obligated to use their profits to make up for any projects that lose money.

Any questions? We are happy to provide more details, just click the “Contact Us” link above.

In February of this year there was a major announcement across all worldwide news platforms that G4S Secure Solutions was selling the majority of its “cash operations” to The Brink's Company.  COVID-19 hit right on the heels of that announcement, and the actual changeover has been a bit slow coming. However as of August 31, 2020 it has become more official, and will generate a minor change in FundingNet operations moving forward.

From this point onward, we will not be offering G4S SKRs (safekeeping receipts) as the security for our clients entering our 80:20 program; moving forward it will only offer SKRs from Brinks, Malca-Amit or Ferrari Group. This will also be the case with our "Asset Backed" program - G4S SKRs will no longer be offered, in most cases it will be SKRs from Brinks, and for certain transactions from Malca Amit and Ferrari Group.

This will have no effect on the strength of the security offered to clients; it simply means that G4S is extricating itself from that end of their business. The responsibility for the vaulting of our gold holdings will be transferred to The Brink's Company, and they will issue the safekeeping receipts that pledge those particular assets instead of G4S.

FundingNet's traditional 80:20 program continues to experience COVID-related slowdowns in processing of deals; however we are still accepting new applications at this time. Our Asset Backed Line of Credit program continues to operate at full efficiency.

Related article for the sale of these G4S operations from to Brinks:

Since introducing our "Asset Backed Credit Line" program, there has been tremendous interest from clients interested in utilizing it. However, one issue that clients are running into when trying to put the offering together with their bank is the bank's ability to confirm the gold bullion being used to underwrite the credit line.

The simplest methods of pledging our bullion to the bank to underwrite a credit line are (a) a SafeKeeping Receipt (SKR) from G4S, or (b) a Letter of Credit. There are a couple of elements to consider for both of these options, that we have continued to refine to make it easier for banks to confirm the gold assets pledged.

If the bank decides they prefer to use a SKR, one of the common issues is that they need to have confirmation of the gold from another bank (rather than only from G4S). We have now made that a simple process - if the bank requires such a confirmation it will be provided to them by JP Morgan in London, via a SWIFT199 communication. JP Morgan will confirm our holdings with G4S to the credit-issuing bank, and that those holdings are unencumbered and in "Good-Standing". Since JP Morgan is one of the two largest banks (along with HSBC) in the western world, this confirmation should satisfy any banking group's due diligence requirements.

If they prefer a Letter of Credit, we have set the process up so that they will tell us which Italian Bank they prefer to receive the Letter of Credit from. The vast majority of banks have affiliate international banking relationships, so we will pledge the gold to whichever Italian bank they are affiliated with, and that affiliate bank will issue the Letter of Credit. For banks that have no affiliate in Italy, we would arrange to issue the Letter of Credit from UniCredit, which is the largest bank in Italy, and the LC would be transferred and confirmed via bank-to-bank SWIFT communication.

IMPORTANT NOTE ** It is necessary that the Letter of Credit come from an Italian bank because the gold bullion we will be pledging to generate the Letter of Credit is vaulted with the Italian Central Bank. The only banks that can communicate directly with the Italian Central Bank are other central banks, OR banks within their banking jurisdiction (in other words, Italian Banks). By pledging our bullion to the affiliate bank in Italy, that affiliate can easily confirm it with the Central Bank, and then issue the Letter of Credit to the bank that will use it to underwrite the credit line.

FundingNet continues to refine this offering to always try to make it as easy as possible for client banks to work with us in setting up financing for our client projects. Go to our "Contact" page to get in touch and get started funding your projects today!

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