(originally published 01/24/20)
On the wholesale side of our business (where we lend money to retail lenders for them to mark up and re-lend) the FundingNet program has historically only dealt with very large loans - minimum amounts of $80M USD. When we created the "direct-to-the-end-borrower" version of the program (of which FilmCabbage is a part) we were initially able to set it up to do loans as small as $4M USD, and process those loans exactly the same as the larger ones. However since the program hadn't really been seeing a lot of activity for these smaller loans, in the fall of 2019 the program was reined in to only be able to submit for the banking compliance process a minimum of $20M in loans. This doesn't mean we can no longer do the smaller loans, but now there is a different process we have to follow to fund them. That process is to submit small loans only as part of a "group" of loans, where their cumulative total can break through that minimum threshold. For instance, if you need a $4M loan (where your initial funds are the minimum $1M), we can provide the loan but it must be submitted to compliance at the same time as other loans that will total a minimum of $20M in loans. That could mean submitting 5 different loans of $4M together, or a $4M loan with another loan of $16M. Or, if we have any $20M loans ready to submit we can submit any/all small deals with it as the total loan amount is already larger than $20M. This process doesn't tie the small loan together in any way to the other loans, but they simply must be submitted to compliance at the same time to achieve that minimum $20M in loans for all submissions. As a result, sometimes there could be a bit of a time lag in getting smaller deals through the 60 day compliance process. The compliance period itself will always be around 60 days, but if we don't have a lot of loans to submit at the time when a small one is ready, it might take a few extra days to a few extra weeks to accumulate additional loans to submit that one with. This post is written so that any potential borrowers are aware that the $20M loan requirement is in place and that smaller loans might experience a minor slowdown before they start the 60 day compliance period. Any loan of $20M or more can be submitted by itself so there will never be any lag there - but smaller deals may see a slightly longer processing time.