100% FUNDING OPTIONS
For potential borrowers that do not have the funds (or would prefer to travel a different path) FundingNet has two Programs that can both offer full 100% financing for projects, without the Project having to bring any initial funds to the table. These two programs have very specific (and entirely immoveable) requirements - however, if you are able to follow the procedures for these programs it is possible to receive complete funding without having any initial funds.
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 the rate of 3.5% per annum, OR "SOFR + 2.5" - WHICHEVER IS HIGHER. The current SOFR rate is top of the page linked here:
THE "SBLC" PROGRAM
Useable for projects with budgets in excess of $25M, the SBLC Program may provide a workable solution. Using this program FilmCabbage (or one of our affiliate companies) would issue a fully cash-backed Standby Letter of Credit (SBLC) from one of our tier 1 banking partners (HSBC UK or Barclays UK) to the borrower's bank. That bank MUST HAVE the full capability to monetize that bank instrument.
Under this example you (the borrower) would need to have a relationship with a bank, either yourself or through a family office or hedge fund, capable of receiving and monetizing a SBLC from FilmCabbage. This bank would receive and monetize the cash-backed SBLC, which would need to be of sufficient size to be able to yield a post-cost value of at least 2X the size of the project. The bank (or their hedge fund/family office client) would then offer FilmCabbage one of three possible options:
Option 1: Non-Recourse Payout - cashable. In this case the SBLC would be "cashable" and we would require 90-95% monetized value for the instrument. For instance if the bank received a cashable SBLC from us for $100M, we would expect them to send us $90M or more once they have received and confirmed it. Upon maturity (12 months + 1 day) the bank would cash the SBLC for the full face value ($100M), and have made $10M on their money. Additionally the bank will have had the instrument on their balance sheet for a year, which they can leverage into additional profits by many multiples.
The first funds from the payout from the bank will be used to cover our costs of the transaction (which are significant), but once costs are covered up to half the remaining amount received from the bank can be lent to the borrower's project to fully fund its budget. Exact amounts required for the instrument will depend on the bank's offered LTV (loan to value) and the size of the project. We will determine that instrument value on a case by case basis.
Option 1: Non-Recourse Payout - returnable. In this case the SBLC would "returnable", which means the borrower's bank would return the instrument, in full value and without encumbrance, upon the 12 months maturity of the instrument. Since the instrument would not be being cashed out, we would be willing to work with a lower LTV%, usually around 70-75%. In these instances we would require the monetizer or their bank to pay out the non-recourse amount within 10 business days of receipt and confirmation of the instrument. Again, the post-cost amount we receive would need to be roughly double the amount of the project loan required. Exact amounts required for the instrument will depend on the bank's offered LTV and the size of the project. We will determine that instrument value on a case by case basis.
Option 3: Bank Line of Credit - returnable. In this case the SBLC would again be "returnable" (in full value and without encumbrance upon the 12 months maturity of the instrument). Here the bank/monetizer would LEND FundingNet the LTV% amount, which we would be expected to repay upon return of the instrument. Since we will be paying interest on this lent amount and having to repay the principal in full in a year, we will require a LTV% of 80-90% of the face value. Again, the post-cost amount we receive would need to be roughly double the amount of the project loan required. Exact amounts required for the instrument will depend on the bank's offered LTV and the size of the project. We will determine that instrument value on a case by case basis.
SETTING UP THE PROJECT LOAN
Once the SBLC has been monetized and the funds wired to us from the bank/monetizer, the project then goes through our usual intake process. The funds from their bank becomes the "proof of funds" for the project and we process their application to receive a loan from us. Once the project has been accepted for funding, we would go through the Term Sheet and then contract process - once complete, financing of the project can commence.
If accepted, since we would be financing 100% of the project, and the borrower/client has no money of their own in the game, we will always take an equity position in the project. That position could range between 20% and 40%, depending on the risk profile of the deal, and the actual number will only be discussed once we confirm that we have a way to monetize the SBLC for the client. The interest rate of the loan will be dependent on the bank's monetization parameters. If the monetization involves FundingNet taking a credit line (which will have an interest rate that we pay for), then the portion of capital being sent to the client for the project will be charged AT THAT SAME INTEREST RATE. If Option 1 is used, where it is Non-Recourse Payout SBLC, and FilmCabbage does NOT end up owing the bank interest, we would loan to the project at 3.5% or LIBOR + 2, whichever is higher (our normal rate).
The other fees from our regular loan programs also apply - a 3% Lending Fee (due upon close, and drawn from the loan funds themselves), the closing costs of the loan, and the monthly cost of the loan caretaker. No fees are due to be paid until AFTER the project is receiving funding from us.
The application process will be the same as on our page "Multiples Program" under the heading "How to Apply". The only difference here will be that there is no requirement for a Proof of Funds, as the funding will already be provided by your banking institution through the monetization of the SBLC.
What Else Will Your Bank Need to Know?
Certain departments of banks are used to the SBLC processes, but typically they deal with existing instruments. As a result they almost always ask you for the "SBLC Verbiage". However, the way we have structured this program is that our instruments are all "new issues" - they will be created by our Tier 1 bank specifically for this transaction. As a result, we will create a new SBLC that can have any verbiage the receiving bank desires. While the SBLC verbiage must always conform to ICC600 standard (International Banking Standard, which these bankers should inherently understand), we can tailor the SBLC to have any wording they like. In fact, we typically tell them, "Give us your preferred verbiage, that will yield the BEST LTV that we can receive, and that is what it will have."
How to Proceed
There are specific "non-solicitation" rules in banking and as a result our banker cannot initiate contact with the receiving banker - this must be done by the banker whose bank will receive the instrument. So we will require the borrowing group's banker to send the borrower/client an email that they will forward to us to provide our bankers. This is to be sent by the banker to the client because they are already dealing with the client in banking, so this is simply confirming their ability to work with the SBLC to their existing client. This email will have to include three things"
1. RWA Paragraph. This paragraph will state that the receiving bank is "Ready Willing and Able" to receive a SBLC from HSBC or Barclays for that has the face value of the transaction to be considered. This paragraph will generally be "based on the following conditions" (ie. receiving sufficient CIS information from us to pass their due diligence protocols), and show the size of the instrument they want to receive and the expected LTV.
2) Banker's Business Card. This will identify the banker, the bank, and include their contact details such as email and phone numbers.
3) Sample SBLC Verbiage. Since we can customize the wording of the instrument to suit anything the receiving bank requires, we would like them to provide us with the verbiage that they prefer.
4) Confirmation if it will be a non-recourse payout, or a recourse line of credit. If it is a recourse line of credit, they will need to include the proposed term (length of time available) and the interest rate.
5) Confirmation that the bank will cover our SBLC issuance costs if they fail to perform for reasons other than compliance issues, once they have requested issuance of the SBLC via SWIFT MT799.
For example (the example below would be for a recourse line of credit (Option 2 above)):
"Hello [client name],
Further to our conversation on the subject, I note that [bank name] is ready, willing, and able to receive a clean, new issue SBLC from [HSBC UK/ HSBC NY / Barclays UK] of up to $500M USD [or appropriate amount]. It would be possible to set up a Line of Credit upon receipt and confirmation of this instrument at a LTV of 85%, contingent upon satisfying our underwriting and compliance requirements, as well as any other condition precedent deemed relevant for [bank name], for a transaction of this nature. Following this, we would expect the process to begin with a MT799, followed by a MT760. Generally speaking, once an SBLC is received in line with established conditions precedents, credit facilities would be perfected and made available to the subject borrower for draws as agreed within a subject credit agreement within 5 business days [or bank's appropriate timeline].
Again upon condition of satisfying all compliance requirements, this would be a repayable/recourse Line of Credit with a term of 12-36 months, and at an interest rate to be determined after [bank name]’s internal evaluation and adjudication. Any other Line of credit terms to be determined by underwriting. The SBLC would be returned to the issuing bank upon full settlement of the line of credit.
[Bank Name] will also confirm within the final contract that upon ordering the issuance of the SBLC, that we will guarantee with full bank responsibility, that the cost for the issuance of the SBLC will be fully covered by [Bank Name] in the event that [Bank Name] backs out of the deal or fails to perform after the SBLC has been requested. That cost would not exceed 2% of face value.
Attached is our preferred SBLC verbiage. Below is my contact information, as I will be handling this transaction on behalf of [bank name].
[banker phone contact numbers]
[if possible, banker's bank address]"
With that email forwarded to us, we can provide it to our banking team who will reach out to the banker and begin the process of setting up the transaction.
For more information about how the SBLC Program, works, please contact us today for furthe details.
THE "ASSET BACKED LINE OF CREDIT" PROGRAM
Like the SBLC Program, this program does not require the borrower to have already raised any initial funds at all. To participate in this program, the client will instead need to have:
(a) a project ready to execute that requires a minimum of $5M in funding, and
(b) a banking relationship with a lender that can execute a credit line backed by assets.
In this program FilmCabbage will work with the client and their bank to set up a dedicated credit line that will be underwritten IN FULL by our group's assets. This credit line would be set up in an amount greater than that required to fund the client project, to ensure enough funds will always be available, and to afford funds to FilmCabbage to put to work in other programs to fully mitigate our risk in the venture. FilmCabbage will provide the Client's lender the amount of pledged assets they require to set up the credit line, either through a bank instrument to be issued from the lending group's own corresponding bank in the banking jurisdiction where our gold is vaulted, an asset pledge of gold bullion from our gold holdings, or an SKR (safekeeping receipt) issued by Brinks, that is fully backed by our gold holdings with them. FilmCabbage can pledge the assets to them in whichever of these three methods the bank prefers.
When our banking team works with your bank to set up the credit line, we will paper the deal so that it is clear that your project is responsible for servicing only the portion of the credit line the project has used, and FilmCabbage is responsible for servicing any remaining balance. But it is always our assets that entirely back the credit line principal 100%.
WHO IS THIS PROGRAM AVAILABLE TO?
We would consider all projects that are ready to execute and have a solid business plan backing it. All that you (the client) need to be able to bring to the table to have your project considered for full funding/underwriting is a bank/banker that will be Ready, Willing and Able to set up the credit line, backed by the asset of their choice.
Once the bank has issued a "soft" confirmation that they can provide the credit line (assuming of course that the asset meets their requirements and all of their Due Diligence requirements), FilmCabbage will require that the client go through our standard application and risk assessment protocols. This is to (a) confirm that we find the project an acceptable risk for us to fully back, and (b) in case of any eventuality where FilmCabbage may end up holding the note for the loan.
For instance, if the project is not completed by the end of the Line-of-Credit term (or if the bank calls it early), FilmCabbage would need to pay out the Line-of-Credit to the bank and would then become the lender of record. So as we and our banking teams work with your bank to set up the Line-of-Credit, the FilmCabbage team will be working with you to process your application and set up all loan agreements to prepare for any instance where we eventually become the lender of record.
Once caveat - there is a time and opportunity cost to developing each credit line and project. As a result, if your project has a budget of less than $5M, it will be too small to be workable under this program, both for the bank in question, and for FilmCabbage. Only projects requiring a minimum of $5M in budget funds will be able to apply.
The most creative element of this program for our participating clients is that they have a zero risk position - they are not required to have any initial funds, they never have to escrow any money..... nothing. They simply facilitate putting FilmCabbage's bankers in touch with their banker that has expressed interest in participating.
The bank will need a great deal of due diligence confirmations, both about us (FilmCabbage) and our assets backing the credit line, but they will perform this diligence themselves. When our bankers are in contact with your bankers, we will have to provide them complete CIS information, and allow them to confirm the asset (whether pledged gold, Letter of Credit or SKR) with the issuing bank/entity via SWIFT banking communication. The bank performs all required due diligence confirmations to ensure that everything is appropriately secured.
We ONLY engage with your lender once they have confirmed that they understand the offering, are content with the setup of the process, and able to proceed using our processes.
FilmCabbage will perform its own diligence/risk assessment on your project to ensure we are comfortable backing it.
ARE THERE ANY FEES?
FilmCabbage will charge each participating client/project a 3% “Structuring Fee” which is due upon close of the deal (when the line of credit funds become available). This fee will cover all costs of setting up the financing with the bank, including the papering of the bank credit line, the setting up of the contracts between FilmCabbage and the client, and the setting up of the security required by the bank to back the credit line. This fee can be paid directly from the credit line proceeds, and can be included as a financing cost in your project budget.
We will assign an independent PWC Project Caretaker to your project, to protect our own interests. This caretaker will ensure that all funds are being used appropriately and the project remains on track, and that when it begins generating revenue that is servicing the debt to the bank. This caretaker will levy a flat $5k a month fee for a monthly analysis of the project, which will be billed to the client directly by them (FilmCabbage derives no income from this oversight).
In addition, since we are assuming full liability for underwriting your project, we will be taking an equity position in the project for doing so. The level of our equity position will be determined on a case-by-case basis, usually based on expected EBITDA, and will be part of the contract set up between the client and FilmCabbage.
For any additional details, please contact your FundingNet/FilmCabbage agent or broker, or contact us through the methods described on the "Contact Us" page.