How We Manage Risk | Hollywood Bridge Loans

Your investment with Hollywood Bridge Loans is in good hands. We operate strategically under well-managed risks. This article aims to address investor concerns and considerations. If you are a borrower, please check us out here.

Key Points

• Return of investor's principal and interest is contractually bound.

• All our bridge loans are collateralized.

• Our strategic partnerships drastically reduce risks.

• Low competition.

• First lien protection.

• Equity pledge and completion guarantee.

All investments inherently entail risks. However, we have measures in place to ensure that we reduce risks for our investors and for ourselves. ​

      First of all, your investment and the promised returns are bound by contract. This arrangement takes form as debt securities from our firm. When requested, we are legally obligated to return your principal along with the agreed interest amount. We have never failed to meet our obligations in this matter. Investors may find this attractive in contrast to investments where return of the principle amount may not be guaranteed due to losses.

      Second, all our loans are collateralized. In the unlikely event that a producer or production company fails to repay the funds they borrowed, we would still be able to recoup the funds. Depending on the agreement with the borrower, our secured loans may be collateralized using script copyrights, distribution rights, business assets, or tax credits etc. We frequently provide funding through factoring and accounts receivable financing of invoices (a business asset). These invoices for completed projects are billed to credit-worthy companies such as Disney. This practice drastically reduces chances of faiure to repay (Since when have you ever heard of Disney bailing on an invoice?). It is aso possible that the production company may use invoices from a post-production film to financing other projects.

      Third, our strategic partnerships drastically reduces risks of loan defaults. For example, one of our main borrowers is a special effects powerhouse that has been involved with countless famous movie productions, including various Marvel and Star Wars blockbusters. Our company was specifically founded to provide funding for this major player in the special effects industry. By relocating production offices to Asia and utilizing proprietary AI software, they are able to produce high quality CGI products at around 20% of the industry average costs. All the meanwhile, they can charge the same rates as competing production houses, leading to significantly better margins. They are expected to outcompete virtually all other players in the special effects space. Yet, due to the inherently delayed recoupment of revenue in the movie industry, bridge loans are still necessary for ease of cash flow. Hollywood Bridge Loans takes advantage of these kinds of unique relationships to produce loans at very low risks. 

      Moreover, there is generally low competition in bridge financing for the entertainment industry. There are only a handful of lenders found on Google. This is partially due to the reliance on networking and special connections within the entertainment industry. Nevertheless, our vertically integrated network of lending partners has made us the go-to lenders for expedited film production financing. This can be attributed to our impeccable track record and the established trust in our relationships with major players in the entertainment industry. Our commitment has resulted in a loyal customer base where our borrowers return to us whenever they need fast funding for their projects. Meanwhile, despite the low competition, the addressable market for pre- and post-production loans is roughly $600 million.

      Additionally, the very nature of bridge loans for the entertainment sector entails relatively low risk. First lien protection entails that our bridge loans are the first debts to be repaid by producers and production companies. Since these loans are high-interest and meant to merely be short-term means to bridge gaps in funding, it is in the interest of borrowers to repay us first anyways. In the preproduction phase, for example, producers will typically repay bridge loans as soon as they can secure long-term financing, such as through banks. During this phase, our company typically acts as the senior lender, and producers need our funds to launch their project by completing casting and hiring decisions, scouting and securing locations, and working with crucial creative decisionmakers. Big banks typically will require these critical actions to be completed before lending out money for a film production. Thus a necessity arises for short-term funding solutions such as bridge loans. The nature of bridge loans being used during pre- and post-poduction thus also means that repayment will never depend on the box office results, since repayment is typically before the movie hits theaters, thereby eliminating an element of gambling on the part of investors. It will not matter whether the movie makes money or loses money. Our loans will be repaid one way or another, and your investment funds will be safe.

Aside from first lien protection, we lend under equity pledge and completion guarantees. An equity pledge in lending is an agreement where a borrower uses its ownership stake in an entity, such as stock or membership interests, as collateral to secure a loan. If the borrower defaults, the lender can take ownership of the pledged equity, which provides control over the underlying asset or business. This offers lenders an alternative path to recovery, potentially bypassing a slower judicial process by acquiring control of the borrower's company. On the other hand, a completion guarantee, or film completion bond, is a form of insurance provided by a third-party guarantor to a film's financiers, guaranteeing that the film will be completed and delivered to them on time and within budget. In return for a fee, the guarantor will either provide additional funds to finish the project, take over production, or repay the financiers if the film isn't completed as promised. This crucial protection assures investors that their money will not be lost if the production runs into significant problems, making it a common requirement for independent films seeking funding and distribution.

As you can see, Hollywood Bridge Loans takes risk management very seriously. We adhere to our strategic measures to ensure that investor funds are used with reduced risks while reaping the highest possible rewards. Meanwhile, we place a strong emphasis on ethical practices, integrity, and accountability. Your investment would be safe with us.

To schedule a consultation, please contact us here.