Iron Bridge’s capital structure is comprised of four tiers of equity (Class A, Class B, Class C and Class D), providing investors with different options to meet their investment needs. Class A is owned by employees of the Company only and is first at risk should a capital loss occur.

On February 1, 2021, the Company restructured its equity into Class A, Class B, Class C and Class D Units. Class D Units receive a 5% preferred return and are senior in security interest to Class C, Class B, and Class A. Class C Units receive a 6% preferred return and are senior in security interest to Class B and Class A but subordinate to (at risk before) Class D. Class B Units receive a 9% preferred return and are senior in security interest to Class A but subordinate to Class D and Class C. Class A Units are subordinate to all other equity classes and receives 90% of any profits in excess of the preferred return owed to Class D, Class C and Class B. 10% of any profit in excess of the preferred return owed to Class D, Class C and Class B is distributed proportionally to Class D, Class C and Class B investors as profit participation.

• Risk Management – the Manager’s investment capital (invested in Class A Units) is at risk before outside investor capital, which incentivizes prudent risk management.
• Liquidity – Because the Company’s loan portfolio turns over in approximately eight months, investors can withdraw their investment with 30-day notice to Iron Bridge, providing investors with liquidity and flexibility.
• Flexibility – Monthly profit distributions can be reinvested, increasing the annualized investment return through compounding. Investors can also make deposits into their accounts at the start of any month. It’s a great way for investors to earn an attractive rate of return on capital that might otherwise be sitting in the bank.

All the Company’s equity classes (Class A, Class B, Class C and Class D) are invested in a portfolio of over 300 short-term (12 month maturity) real estate loans secured by first lien deeds of trust. The approximate average loan-to-value of the loan portfolio is 68%. In other words, the company’s loan portfolio, in which Equity Program investors are invested, is insulated from loss by approximately $60 million of our borrowers’ equity, which is at risk first.

However, each class of equity investment is further secured by any subordinate (at risk first) equity class. For example, Class D is the most secure investment program and has a senior security interest on all the Company’s assets, ahead of Class A, Class B and Class C. In other words, Class D investors are secured by our borrowers’ equity of approximately $60 million, plus the additional Class A, Class B, and Class C of approximately $57 million. As a result, Class D investors have an effective loan-to-value on the real estate collateral of 38%.

Similarly, the Class C is the second most secure investment program and has a senior security interest on all the Company’s assets ahead of Class A and Class B but is subordinate to (at risk before) Class D. In other words, Class C investors are secured by our borrowers’ equity of approximately $60 million, plus the additional Class A and Class B of approximately $28 million. As a result, Class C investors have an effective loan-to-value on the real estate collateral of 53%.

Similarly, the Class B is the third most secure investment program and has a senior security interest on all the Company’s assets ahead of Class A but is subordinate to (at risk before) Class B, Class C and Class D. In other words, Class B investors are secured by our borrowers’ equity of approximately $60 million, plus the additional Class A of approximately $8 million. As a result, Class B investors have an effective loan-to-value on the real estate collateral of 64%.

For the 12 months ended December 31, 2023, the Company generated $13.8 million in total revenues available to pay interest expense and investor preferred returns. With average portfolio leverage of 32.0%, the Company paid interest expense of $2.8 million related to Bank Borrowings. The Company paid preferred returns of $1.1 million related to Class D Units, $1.8 million related to Class C Units and $1.8 million related to Class B Units.

Total revenue was 4.9 times the amount necessary to pay interest expense related to Bank Borrowings; 3.5 times the amount necessary to pay the interest expense and preferred returns related to Bank Borrowings and Class D Units combined; 2.4 times the amount necessary to pay the interest expense and preferred returns related to Bank Borrowings, Class D Units and Class C Units combined, and; 1.8 times the amount necessary to pay the interest expense or preferred returns related to Bank Borrowings, Class D Units, Class C Units and Class B Units combined.

In these calculations, the preferred return payable to Class D investors is combined with the interest payable on Bank Borrowings because Bank Borrowings have a senior security interest to Class D investors. Similarly, the preferred return payable to Class C investors is combined with preferred return payable to D investors and interest payable on Bank Borrowings because Class D investors and Bank Borrowings have a senior security interest to Class C investors, and; the preferred return payable to Class B investors is combined with preferred return payable to Class C and Class D investors and interest payable on Bank Borrowings because Class C and Class D investors and Bank Borrowings have a senior security interest to Class B investors. We believe that this level of coverage provides investors in each class a significant layer of protection that should help safeguard investor capital during an adverse economic event.

Iron Bridge has a $80 million (increased from $60 million at 12/31/23) line of credit with Umpqua Bank, which has a senior security interest in all the Company’s assets. The Company targets a line of credit utilization rate of 50-80%, which allows the Company to meet unanticipated loan requests from borrowers or unanticipated withdrawal requests from investors. Similarly, if the Company’s portfolio loans pay off faster than anticipated or if new loan originations do not match the rate of loan payoffs, the line of credit can be paid down while keeping investor capital fully utilized.

As of December 31, 2023, the Company’s allowance for loan losses equaled 1.5% of the active loan portfolio. This compares to the Company’s total loan charge offs of 0.207% since inception (2009). See the Company’s offering circular and most recent quarterly report for more details.

For each prospective borrower, the Company performs a criminal background check, orders a credit report, measures liquidity, interviews the borrower to assess experience level and evaluates the quality of previous work. The Company also requires each borrower to provide a construction cost budget, detailing the cost and scope of planned capital improvements, and a profit analysis, detailing the borrower’s estimated resale price, total project cost and estimated profit.
As an asset-based lender, the Company’s underwriting guidelines are heavily weighted toward real estate valuation, liquidity and loan-to-value (LTV) coverage.

Specifically, the Company operates under the following underwriting guidelines:

• The Company does not lend more than 70% of the estimated “after-repair value” of the collateral;
• the Company does not lend unless secured by a first lien deed of trust or mortgage;
• the Company does not lend unless the borrower has a clearly defined exit strategy; and
• the Company does not lend without assessing the borrower’s ability to pay.

The Company has the sole discretion whether to originate a mortgage loan at a given LTV. Some of the factors considered by the Company when determining the maximum LTV to be extended on a mortgage loan are:

• age, type, condition, and location of the collateral; • borrower creditworthiness and credit history;
• loan amount and credit terms requested;
• additional cross-collateralized properties;
• proposed changes to or reconstruction of the collateral;
• tenant history and occupancy rate (if applicable); and
• amount of the interest reserve or construction loan (if any).

Our private lending business has performed well in both increasing and decreasing real estate pricing environments since inception (2009) and is not dependent on a high volume of distressed real estate sales, a restrictive lending environment or appreciating real estate values. It is important to understand that our borrowers create value in their real estate projects by making strategic capital improvements, and Iron Bridge shares in the borrower’s value creation by making a loan secured by the real estate collateral and receiving interest payments. As the real estate environment changes, Iron Bridge will adapt by shifting its loan portfolio to different geographic markets and adjusting its loan programs and related underwriting guidelines accordingly.

The company has developed and continues to develop a network of real estate investors who have a need for private real estate financing to execute their investment strategies. These investors are professional home builders, developers, rehabbers, remodelers, or other real estate-oriented professionals who utilize different techniques to acquire, improve and resell real property.

A common misconception is that these borrowers must be low quality with bad credit scores otherwise they would borrower from a bank lender. On the contrary, these borrowers generally have good credit, experience and liquidity. However, they choose to use private financing over bank financing due to the superior speed and efficiency.

The collateral agent will be the law firm, Carr Butterfield, LLC. The Collateral Agent is available to organize Equity Program investors, if needed.

In connection with this offering, the Company will also be required to file with the Securities and Exchange Commission (“SEC”) annual, semiannual, and current event reports for so long as offers and sales of Equity Program units are ongoing. These SEC reports will be available to investors when filed with the SEC.

The Company’s books and records are maintained on the accrual basis for accounting purposes and for reporting income and losses for federal income tax purposes.

Equity Program investors may elect to have their monthly profit distributions (A) sent to them in cash via electronic ACH transfer, or (B) reinvested into additional Units. Equity Program investors who choose monthly reinvestment will benefit from compounding monthly returns and an increased annualized yield. In addition, taxable investors will receive the full 20% 199A federal tax deduction.

• If the Class D investment return is 5.2% (5% preferred plus 0.2% participation), then the compounded annual rate would be 5.3%, and the tax-adjusted equivalent rate would be 5.8%
• If the Class C return is 6.2% (6% preferred plus 0.2% participation), then the compounded annual rate would be 6.4%, and the tax-adjusted equivalent rate would be 6.9%
• If the Class B return is 9.2% (9% preferred plus 0.2% participation), then the compounded annual rate would be 9.6%, and the tax-adjusted equivalent rate would be 10.2%

To manage its capital structure, the Company requires Class B investors who chose monthly reinvestment to reinvest in Class C or Class D Units.

An accredited investor is generally defined as an individual who has a net worth of at least $1 million, excluding the value of the investor’s primary residence, or has had an individual income in excess of $200,000 for each of the two most recent years, or a joint income with the investor’s spouse of $300,000 in each of those years, and has a reasonable expectation of reaching the same income level in the current year.

After all of your questions have been answered, if you are interested in moving forward, you will need to indicate how you intend to hold your investment: (a) in your name individually or together with a spouse; (b) through an entity (e.g, trust, limited liability company, corporation), or; (c) through an IRA or other tax advantaged account. With this information, our team will email you the correct subscription package in PDF format, and the same subscription package using SignNow for electronic completion and signature.

After your subscription package is complete, Iron Bridge will debit your initial deposit, using electronic ACH transfer, from the bank account you provided. Investors may also choose to send a wire using the instructions provided in the subscription package.

Investors should email [email protected] to request a deposit form or withdrawal form. Our team will email you a simple two-page withdrawal or deposit form to be completed and signed electronically using SignNow. Once completed, Iron Bridge will initiate the deposit or withdrawal transaction using electronic ACH transfer to the investor’s bank account.

For security purposes, Iron Bridge prefers to initiate all electronic ACH deposits to and withdrawals from the investor’s bank account. If prospective investors wish to wire transfer funds to Iron Bridge, we strongly suggest that you call Iron Bridge on a known phone number to verify the Iron Bridge wire instructions.

Deposits can be made at the beginning of any month. Withdrawals can be made on any day of the month. However, investors who withdraw during the month will not receive an investment return for that month. Therefore, we suggest that investors make withdrawals during the beginning of any given month to maximize investment returns. Withdrawals can be made with 30 days notice to the Company. Withdrawal requests made within less than 30 days will be executed by the Company on a best-efforts basis.