Film Financing for Producers | Tax Credits, Distribution, Soft Money
Film Financing for Producers

Film Financing for Producers

Pre Sales, Tax Credits, Investors

Film Financing for producers comes in dozens of forms and is spread across the entire production cycle of a film. Film financing methods include tax credits, pre sales, distribution deals, profit participation, product placement, soft and hard money, film grants, private film investors, studio financing, location incentives, debt financing, gap financing, bridge loans, donations, crowdfunding, slate financing and multiple other film financing sources.

The majority of independent films are financed through a different mix of all these varied funding sources and very rarely is a film financed through only a single financing avenue. Additionally, securing just one type of film financing for your budgeted film can also start a snowball effect, where many of the other types of film financing then become available. It is in the best interest of all film producers and filmmakers to have a solid understanding of film financing and all methods available to them during different levels of production so they can make the best financial choices for themselves, their films and their private investors, if applicable.

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Film Financing - Soft vs Hard Money

Usually all financing can be categorized as either soft- or hard money and both are extremely valuable and can be used to secure the other. In short, Soft Money does not have to paid back, and Hard Money does, usually with an anticipated profit on top of the initial investment (a return on investment). These terms are also used in other financing capacities, not just the film industry, such as in political fundraising.

  • Soft Money refers to film financing that has nothing to do with a film's ability to produce a profit, and it does not have to be recouped or repaid. Soft Money examples include: tax credits and rebates, location incentives, product placement, film grants, cross-promotion, "in kind" donations
  • Hard Money is any investment made on a commercial basis, with a claim attached. The "claim" may include part of the profits for co-producers and/or equity investors, or interest if it's a matter of a loan or venture capital investment, with an exit tied to a recoupment plan.

Film Financing Soft Money Examples

  • Subsidies, such as film grants or soft loans, usually from regional sources that support local content, such as various film funds. In many countries or states, the local film commission will subsidize a percentage of your budget because you are essentially providing jobs for local workers.
  • Tax Incentives, including State, Federal and Foreign. Using tax incentives is like getting free money. In particular, research the US Federal Section 181 deduction (when it is live. It often changes by year and by politics. It also can be retroactive when reinstated). Tax credits are also available in Puerto Rico, South Africa, Abu Dhabi and many other film locations.
  • Product Placement, the right for a company to present their products in a movie or TV-show, can account for a substantial part of the financing of many projects. Either through cash compensation or by companies offering their products, services or discounts in exchange for the exposure.
  • Crowdfunding - most crowdfunding is made on a donation-only basis and not tied to the financial success or revenue of a film, which defines it as soft money
  • Cross promotion is when a company pays for the right to use or associate with a specific movie brand in the marketing, such as when a fast food chain offers special meals with action figures.
  • Donated goods and services, also called "in-kind" services, may be offered by catering companies, locations and others.
  • Exchange rates may also be considered soft money. For example, at the time of this writing, many productions are filmed in countries whose currency is less strong then say, the US Dollar or British Pound.

Soft money is especially helpful when used to secure hard money. Not only does soft money enhance your bottom line, but it adds significant credibility to your business plan and investor pitch and gets you much closer to a box office. Investors like to know you have "skin in the game," meaning, you have contributed your own money or put serious thought to the finances. Now, let's say you do not actually have cash to lend your project. Maximizing your soft financing options shows you have put serious effort to your film's finances and are not solely reliant on your investors. This makes your project far more attractive from an investor's perspective and gives you significant credibility, even as a first time filmmaker.

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Film Financing Hard Money Examples

Film hard money has several dozen formats and each requires different laws be followed and different documents be prepared depending on the level of risk. Whether you need an attorney (almost always), whether you can fund raise across state lines, whether you need a Business Plan, Financial projections, a PPM or any other documentation are all best determined by an attorney.

  • Individuals
  • Active Investors
  • Passive Investors
  • Pre Sales
  • Distribution Deals
  • Negative Pick Up deals
  • Advance/ End User Financing
  • Split Rights Deal
  • Foreign Pre-Sales and Gap Loan Financing

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Film Financing and Investor Manual

Independent Film Financing Plan Package
Do you know how to incorporate the various film financing options in your Businss Plan and other investment documents? How to target the best investors for your type of film? Are you ready to create your Independent Film Financing Plan? Get a huge advantage over other Independent Filmmakers with our Movie Investor Package:

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More on Film Financing

Film Financing Lessons

Film Financing Lessons

Get inspired and learn from these Film Financing Lessons by famous producers, such as Steven Spielberg, Lee Daniels, Kevin Smith, Richard Linklater and how they got their first film financing. Film financing is a never-ending process...no matter how famous and successful they are, successful filmmakers see film financing as an innate part of film production throughout their careers.

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Film Financing Companies

  • Media Funding Partners
    Specifically for independent producers and distributors seeking between $1 and $30 million in P&A funding. No production funding offered. Resources come in the form of traditional media buys such as Network Television, National Cable/Syndication, Syndicated TV Shows, Spot Broadcast & Cable, Radio, Web Banners, Newspapers, Magazines and more.
  • Advantis International Media Funding Solutions
    Advantis International film financing funding company will invest our media inventories in your qualified event, show or movie venture.
  • IndieCrowdFunder
    New Equity-Based, Crowdfunding site aiming to follow all SEC rules, help filmmakers through the process and connect producers with accredited investors.
  • Start Ups Co
    Connect with Angel Investors looking to invest in the entertainment film business
  • Virtual PitchFest
    Become a member and pitch to over 225 Hollywood VIP's with a guaranteed response.
  • Slated
    Their accredited investor network ranges from high net worth individuals, to seasoned film financiers and large financial institutions. By having a film listed on Slated, your film profile gets automatically disseminated to people seeking opportunities that match their funding criteria.

More Film Funding Companies:

  • moviefund.com
  • groundswellfilms.com
  • alconent.com
  • sisung.com

Icon Entertainment Capital (likely closed)
Whether you have already made a small movie that did well or you are a first time filmmaker with talent and confidence, then MGM Film Funding may be able to help you. www.iconentertainmentcapital.com

Film Angels (likely closed)
Silicon Valley group whose members back film productions – mostly small, independent projects. Many of the angels in the group invest in the “low six figures” per film. www.filmangels.org

Hollywood Film Investors (likely closed)
A network of over 3,800 film and entertainment investors and groups. HFI is not looking for art films that are likely to appeal to only a small niche, but rather, fresh material that will make money, while not ignoring art and depth. www.hollywoodfilminvestors.com

Passion First Funding Portal (likely closed)
Utilizing the JOBS Act (not active 2017-2019), the primary goal of Passion First is to establish a relationship between film projects and possible investors. www.passionfirstfunding.com

Grosvenor Park Media (likely closed)
A media & entertainment specialty finance company offering expert advisory and single-source financing solutions. Over three decades, Grosvenor Park has arranged more than $1 billion in financing for 400+ film and television productions. http://grosvenorpark.com

TriStar Film Finance (likely closed)
Provides key funding products for motion picture and television production of budgets up to $20M. Services include: Labor Tax Credits, Completion Bonding, Gap Financing and P& A Financing. http://www.tristarfilmfinance.com

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