Our investor base has grown tremendously over the last couple of years. To be able to cater to the varied needs of our investors, we have continued to innovate and launch new products based on their risk appetite and deployment needs. For investors who are looking at additional security or guarantee to back their investments, we have launched the Property-backed Secured Investments (PBSI) and Guaranteed Secured Investments (GRI). As an extension of these product families, we have rolled out a new product called Guaranteed Property-backed Investment (GPI), which combines the strengths of both the PBSI and GRI products to offer investors another option to diversify and invest.
WHAT ARE GUARANTEED PROPERTY-BACKED INVESTMENTS (GPI)?
Guaranteed Property-backed Investment (GPI) is an investment into a Property-backed note that we currently offer to our SMEs. What sets this product apart from the existing PBSI is that both the principal & interest repayments for GPI are effectively guaranteed. Here’s what you need to know about GPI:
- Name: Guaranteed Property-backed Investment
- Interest rates: 3% - 8% p.a.
- Tenor: 6 - 12 months
- Guaranteed Repayment: Monthly Interest + Bullet Principal received at the end of the tenor
- Security & Guarantee Information:
- Singapore property put up as collateral by the SME with 1st charge in favour of investors
- Personal or Corporate Guarantee from Issuer
- Additional Guarantee from FS Capital ensures that even if the issuer defaults on principal, investors still receive repayment within 45 days of the due date, along with interest for every day of delay.
- Empanelled Savills, leading global property agent, to liquidate properties for both GPI and PBSI products
How to make an investment into GPI?
HOW ARE THE INVESTMENTS EFFECTIVELY GUARANTEED?
GBPI falls under the same category as GRI whereby Funding Societies ensures that investors receive both the principal and interest repayments in their account regardless of whether the SME makes a repayment or not.
HOW DO WE DO THIS?
Each deal is assigned a counterparty - our sister company FS Capital Pte. Ltd. ("FSC") - which effectively guarantees the deal. FSC will repay investors on the scheduled interest repayment dates, which typically take place on a monthly basis, regardless of the SME’s repayment status.
As the repayment risk is mitigated by the additional guarantee, the interest rates would likely be lower than the usual PBSI deals on our platform.
If the situation arises whereby the SME defaults, Funding Societies has the right to liquidate the property to recover the funds. Regardless of the property liquidation outcome, investors are guaranteed to receive the remaining repayments within 45 days after the scheduled last payment is due.
WHAT’S THE DIFFERENCE IN THE PROCESS?
The crowdfunding process is mostly similar to our usual crowdfunding campaigns. The only difference to take note of is that GBPI is a new product and has its own Auto Invest settings. Hence, a fresh Auto Invest bot needs to be set up. Learn more about Auto Invest here. Other conditions as applicable to PBSI and GRI will apply for this product as well.
How to set up Auto Invest for GPI?
- How is this different from Property-Backed Secured Investment (PBSI)?
While both Guaranteed Property-backed Investment (GPI) and PBSI have issuer's property backed as collateral in the event of a default, GPI investors would receive repayment within 45 days of the due date regardless of default status or of the outcome of the liquidation of the pledged property. This is because of an additional layer of guarantee provided by FS Capital, our sister company.
- How can I participate in GPI?
The way to go about investing in this product is the same as the rest. Most investors deploy their funds via Auto-Invest and there’s also the option to manually invest when the crowdfund opens. Similar to our Guaranteed Returns Investment product, we are also expecting GPI to fill fast so having an Auto-Invest setting in place would increase the chances of investing in this. If you have not set up your auto investment settings for this product, please login to your account and click on settings to activate it.
- Will I still get notifications before the deal starts crowdfunding?
Yes. Investors would receive notification on this product via email and push notification on the mobile app when an upcoming investment opportunity is available. As per the norm, investors would be notified at least 3 hours in advance prior to the crowdfund opening.
- What other products are guaranteed by FS Capital?
Besides GPI, we have another product called Guaranteed Returns Investment (GRI) that also provides investors with guaranteed returns. The difference is that GRI does not have a property as collateral backing the note.
- Are there any Investor fees charged for this product?
Yes, our standard fee of 18% of interest earned is charged. For example, if the interest rate is 8%, your earnings after the fee is 6.56%.
- Am I entitled to any late repayment fees if FS Capital repays me late?
While we're not expecting FS Capital to make late repayments, investors are still entitled to late repayment fees for every day of delay.
- How does FS Capital manage the cash flow to ensure that they can make repayments even if there is late repayment or default on the SMEs’ end?
FSC manages risk as a whole with margin for defaults to effectively manage the performance. In the event of higher than anticipated number of defaults, FSC has a cash buffer kept aside in escrow which will be activated to repay investors.
- What are the types of Properties that can be pledged?
They can be residential, commercial or industrial
- Who owns the Properties pledged?
The property being pledged may be owned or co-owned by a Director/Owner of the SME company itself or by a related entity
- Who will hold the mortgage or charge on the Properties?
FS Capital or any other appointed agent/ custodian (so appointed from time to time) will hold any such property as security, by way of a charge or mortgage for and on behalf of all investors.
- How is the pledged property secured?
Funding Societies mostly accepts the first mortgage or charge on the property for all notes. Our panel lawyers help us in the creation of the mortgage or charge and FS Capital holds the mortgage or charge on the property on behalf of the investors.
- Do the properties pledged have existing loans tied to them?
Most of the Properties accepted as security or collateral are unencumbered or free of charge or mortgage. For Properties with existing mortgage, Funding Societies will only accept security on such Property as a second mortgage of the financing taken out with Funding Societies when the Loan-To-Value (LTV) ratio of the financing amount to the remaining equity in the Property (which is the estimated Property value less the value of the first mortgage) falls below the LTV ratio prescribed by Funding Societies
- How do you make sure that the property isn’t mortgaged to multiple institutions?
The relevant title searches Singapore Land Authority on the said property will be conducted by the appointed lawyer to verify this before the property is accepted as a collateral. The note issuer shall not be further mortgaging the mortgaged property to Funding Societies to a future financier or lender after it being mortgaged to us without our consent and approval
- Why are returns lower than Term or Invoice Financing?
We adopt a risk adjusted returns approach for all our products. As these notes are guaranteed by FS Capital and further backed by assets, it increases the likelihood of recovery of Principal and Interest since the asset can be liquidated or foreclosed by the mortgagee (i.e. FS Capital) in the worst case scenario of a default. There is late interest charged (0.1% per day on overdue principal) to the SME in case of delays in repayment, which is fully credited to the investors.