The Hero’s Guide to Film Finance – Special AFM Teaser
You choose to finish your introduction with “Producer.”
…Producer. I’m setting-up financing on an amazing
script I just optioned. You should take
The man is still listening, so you continue.
The budget is 5 and–
Now he interrupts.
How are you financing it?
He really cuts to the chase — that’s refreshing. You decide to do the same. Quickly recalling the pie chart on your napkin, you remember your options are:
- Cash/Equity: This could either be a fund or a wealthy individual that would invest the cash needed to cover your budget.
- Incentives: That state with the 30% tax credit sounded pretty good.
- Pre-Sales: If you choose the right sales agent, you could pre-sell some of your territories to foreign buyers and use it as collateral for a bank loan.
- Gap Loan: A bank, fund or individual could loan you money against the value of your unsold territories.
Respond with: “All equity.” (It’s the fastest form of financing to close and it doesn’t add excessive interest or fees to your budget, but you will have to give up more profit on the backend.)
Or will you respond with “A combination of equity, pre-sales and gap.” (This option would take longer to facilitate and is more expensive to your budget, but it will allow you to keep more profit on the backend.)
I’m definitely shooting in a 30% tax
credit state. The rest will be…
If you go with “All equity” turn to Page 9.
If you go with “30% pre-sales, plus 30% gap and 10% equity” turn to Page 10.
(Wait! How confident are you that your percentages are realistic???)
If you’re fine with your numbers, continue to Page 10,
(Otherwise, if you think it should be…)
“20% in tax credits, 20% pre-sales, 20% gap and 40% equity” turn to Page 11.
(Or if it’s more like…)
“20% tax credits, 20% pre-sales, 30% gap and 30% equity” turn to Page 12.