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Film Production Financing Basics

Obtaining film production financing from reliable sources

By Nate Waymire, Freelance Writer
Financing films is a tricky business. In order to get money to make an independent film you must convince lenders they are making a worthwhile investment that will provide a return on their money and, perhaps, turn a profit. It is impossible to know for sure if any movie will do well and make money, so the film financiers must believe in the project almost as much as the movie makers.

To start off, it is essential to create a pitch that is designed to sell potential investors on the cinematic story you want to tell. Once you are prepared to sell your story, it's time to get out there and find the money. When looking for start-up financing, film production companies have a few avenues to pursue. Some of the methods for film production financing include:

1. Taking out a business loan to finance movies that your production company feels will be profitable;

2. Finding film investors who are willing to give you money to begin or continue production;

3. Working with independent film financing organizations.

 

Request a business loan when financing films

A loan may be the easiest way to obtain film finance capital, but it must be paid back regardless of whether your movie makes or loses money. The payback amount will also include interest, so it can be an even larger loss if the movie does not do well. Most movie loans will be unsecured, because there is no collateral put up to back the loan, and will therefore come with a higher interest rate. A lender is taking a risk on a loan that is not secured and, the greater the risk, the higher the price.
Try: Start financing films with money borrowed from Business Loan HQ, Hollywood Funding or Global Financial Services.

Receive film financing from an independent film distributor

One of the most important film production financing basics is that independent film makers and distributors often work together to create movies that would otherwise never be made. This is also known as a "pre-sale agreement," and it involves a film maker convincing a distributor to provide financing in exchange for the distribution rights to theaters or for DVD releases. The actual money will either come from the distribution company or they will secure a loan to provide the funding.
Try: Work with distribution and film financing companies such as the Independent Film Finance Alliance or IndieVest.

Obtain movie production financing from an investor

An investor is a person or group that provides money to produce a film in exchange for a piece of the back end. That means, if the film does well, the investor recoups the money and then earns part of the profits. Because every investment is a risk, if the movie does not make money the production company is not expected to repay the investors.
Try: Get involved with investors such as FilmProposals or Bingham McCutchen.

 

  • Secure film funding from backers that will make an equity investment. This means they will get a percentage of the profit if the movie does well, stock in your production company or a limited partnership on the project they are helping to finance.
  • Find out if your production company is eligible to receive an exemption from the federal registration policy created by the U.S. Securities and Exchange Commission. Without an exemption, this policy could end up costing your company extra money.
  • Work with other independent film makers who can help guide you through the film production financing basics when you are embarking on your first project.

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