When we introduced FilmCabbage in 2018, the processes we had in place for the FundingNet Multiples Program had been operating reliably and problem-free since 2005, when the program was strictly a wholesale lending program. Since the onset of the COVID19 epidemic in 2020 there have been some challenges to those processes, which has resulted in major updates to our program to ensure the security of our clients' initial funds.
Whereas we had previously used 3rd party fiduciary companies, law firm IOLTA accounts and registered escrow agents to hold client funds in safekeeping, FilmCabbage clients had often asked us for a more regulated method - one where the security of their funds would always be under the constant scrutiny of financial authorities. As a result, as described on the various pages of the FilmCabbage website, we have overhauled all processes related to client funds so that everything now exists in a completely regulated environment where the borrower / investor's qualifying capital is not only overseen by a fully regulated entity, but also earning 5% / yr. while it sits safely on the sidelines..
Now, when clients approach our Multiples or Loan Sponsor Programs they are put directly in touch with a securities issuer, who will bond their funds through that fully registered and regulated security. There are 7+ ways clients can pledge their funds to this security which, once in place, unlocks multiples of their initial amount to become their loan. Since all funds are pledged to a governmentally regulated security, and clients receive full disclosures on this security from the issuer (which they can have their securities lawyers examine to any level of scrutiny they require), it ensures that their funds are always safe, secured and earning while their loan is outstanding.
Once the loan is settled, their funds are released from the pledge to the bond (often without ever having left their own bank account) and are free to be re-allocated elsewhere. There is NO CASE EVER that the client's initial funds do not end up back with them, even when the project fails and they are unable to repay us. That's correct - their funds are never used as collateral for the loan, and never at any risk from loss. Only FundingNet/FilmCabbage's loan funds are at risk, as we assume all potential risk for the project at hand.
At FundingNet and FilmCabbage we strive to ensure any risk to the client funds is always fully mitigated. By evolving our processes and safekeeping mechanisms into a fully regulated environment, we have eliminated any possibility that client funds could ever be exposed to risk or ever be mis-used by the involved 3rd parties. FundingNet never has any involvement with client funds, but in making these changes we have completely ensured that all parties are always fully protected.