We're very excited to announce that as of September 21st, 2016 all new offerings will be issued from a newly formed Special Purpose Vehicle (FTF Lending, LLC.). This new structure provides industry best-practice protections to all investors on our platform.
So what does this mean, what's new and what stays the same?
We will continue to offer Borrower Payment Dependent Notes (BDNs) meaning these investments will continue to be treated as 1099 income.
A new entity, FTF Lending, LLC will now be the originator of the underlying loans as well as the issuer of the BDNs. This Special Purpose Vehicle (SPV) is 100% owned by Fund That Flip, Inc.
A third party Delaware-chartered Trust has been retained to perform the duties of a Trustee on behalf of all lenders in the event of "default" as defined by the Indenture Trustee Agreement. Events of default include bankruptcy or other events which may have an impact on the solvency of the Company.
Each time you invest in a project on our platform you are subscribing to a Borrower Payment Dependent Note and Investor Agreement. These two documents are further supplemented by a Private Placement Memorandum and Indenture Agreement. The below discusses how these documents fit together to make up your investment.
- Private Placement Memorandum: This document provides a comprehensive explanation of the investment offering, associated risks and mechanics of our business. You should read this document before investing.
- Indenture Agreement: This is the agreement we have in place with a Delaware-chartered trust company. The trust company will act on behalf of investors as a trustee in the event the Company "defaults", which includes bankruptcy or insolvency.
- Investor Agreement: This is the agreement between you and FTF Lending, LLC. It defines important terms, governs your investment and outlines your representations, warrantees and covenants; among other material items. You will be required to sign this document on each investment and it should be read carefully.
- Borrower Payment Dependent Note: This document outlines the specific details of each investment. You will also be required to sign this document on each investment and it should be read carefully.
In summary, these changes provide a meaningful improvement to the protections afforded to you as a lender on our platform. This post is meant only to provide a summary of the investment documents. You should download and read the complete package prior to investing.
FAQs About New Structure
Q: Will my previous investments be converted into this new structure?
A: Because of the short term on the majority of our loans, we will not be converting older loans to this new structure. Doing so would require each investor to sign a new subscription agreement. After surveying several of our more active investors, the consensus was that it was not needed.
Q: How will this impact my taxes for 2016?
A: You will still receive a 1099-Int from us at the end of the year. If you've invested in both the old and new structure, you may receive two 1099's; one from each entity.
Q: I was very familiar with your old investment documents. Do I need to re-familiarize myself with the new documents?
A: We always recommend reading the complete set of investment documents. The new documents will look familiar as their intent is very much the same as the old investment documents.