The Wild West of Independent Financing is often the most exciting route to get your project off the ground. Yes, you will work long hours, and you will have to think constantly outside of the box and continuously adjust your course to get you to the finish line, but you will also learn the business of film making inside out. If you can handle making a movie from inception to distribution and all, jump all the hoops in between, you will know how good (or bad) of a producer you are.
Indie Financing is a puzzle game. One piece needs the other, and you need to pursue them all at once. Unless your daddy is Bill Gates, you need to ask for money and services and tax credits. So, you have to learn to be a successful beggar with the personality of a car salesman, the patience of a Buddhist monk, the mind of a mathematician, the tenacity of a Wall Street broker, the creativity of an ad exec, and the fashion style of a Fortune 500 CEO.
This is where you go chase your money…
Independent Distributor Financing
An Independent Distributor is a distributor, not regularly or substantially affiliated with a major studio. They specialize in foreign distribution, and most are members of the Independent Film and Television Alliance (IFTA). Although more and more of them have production divisions, they do not have The financial resources of a major studio. When submitting a project to Sales Agent/Indie distributor you have to have some equity financing in place (at least 20%) and go to them with a Budget, Business Plan and some attachments (actor, director). If they like your project, they will most likely try to propose it to their distribution clients for pre-sales or at least get commitments from various territories to release the future project. With those agreements in place, if the distribution clients are “bankable,” you can get a loan In the bank for a portion of those future earnings and advances. Sometimes they will gauge the interest of buyers from around the world to see if your film project is viable and they may be able to help you with a letter of credit for a certain amount of dollars against international rights. Most films you see in the major festivals like Sundance, Berlin, TIFF (Toronto) and Venice have been financed or partially funded in this manner.
This avenue of financing will allow you a proactive role in the film making process. You will have a say and opinion on casting, and you will be able to attend the film festivals and network to create a presence for yourself on your merit and talent. This active role is also a good path to becoming an Academy Award nominee if the film gets selected at major film festivals. You will receive more attention and have a better deal for yourself in future earnings though be prepared to cut your fees to be a “Team Player’.
Talent Agency Financing
Occasionally, you can obtain assistance in the funding through talent agencies. A talent agency will package your film with two or more of Their clients. If their clients are interested, they are motivated to do the work for you and to set up your project in a studio, and with equity investors, they often have access to. They will do this primarily to increase their packaging fee and the possibility of having the film being made, especially if the film could have strong festival appeal and secure nominations for their clients. For you to ensure the success of the film, it is important to have the right package. Because many actors who create revenue for those talent agencies have their project they’re passionate about, be prepared not to become a priority for them. They want to please their clients first and may drop you like a hot potato if they do not see any traction or interest on your film even when their clients are attached to it.
End-User financing is when a Digital Studio, cable or television station will put up money in exchange for equity percentage participation in the film’s revenue stream for specific markets. This method is very similar to pre-sale financing. It is called a negative pick up. With pre-sale financing, the end-user does not put up any money until after the film is delivered. The actual production money will come from a lender (i.e. investor, bank, independent distributor) much like Independent Distributor financing. With the growth of digital studios like Amazon Studios and Netflix, the competition is fierce. You will be required to have a strong package, and you are going up against show runners of major television hit shows wanting to break into Film. An End User deal will allow you to keep some territories and revenues for yourself splitting the pie into a few slices and therefore mitigating your risk in case one of the revenue avenues goes on a loss or shady accounting.
Completion funds are designed to provide partial production financing or post-production financing. These funds can be provided for films that Meet the following requirements:
a) have completed principal photography;
b) Are complete except for post-production, or
c) are complete through post-production, but can not be released from the lab due to unpaid lab fees.
If you are obtaining financing through a lender, they will require a completion bond which will ensure the project will be finished. These funds rarely put up all the money needed to produce a film. They are sharing the risk with other investors and are often the FIRST MONEY OUT as you need them the most if you want to be able to release your Film and pay back your investors.
Tax Credit and Co Production Financing
Around the world, there are deals to be made if you shoot in particular location and countries. Do your homework as to what percentage of those “tax credits” will be. Many think this is financing, but it truly is not in the real sense of the world. You get this money back (credit) months after you have done your film so really, is more of a guarantee to your investor will make some part of their investment back through the tax credit even if the movie tanks. There are some lenders that cash flow against tax credits but the paperwork is gigantic as are the costs of legal fees to get these papers executed and the loans processed. Sometimes you will need to have a local producer to process these tax credits. They will want to be co-producers in exchange, and this will be their investment, the time they put in. The fact that they are eligible for these tax credits as they live in the location and have to show tax returns, company records, etc. Of course, they will also be able to spear head the production in the foreign country or different US state, as they have access to vendors and can contribute to strong deal making skills and knowledge of the location you are shooting in.
Every week, the landscape for film and television financing changes. Once again, this is just general information on the process of chasing the movie money. I urge you to assemble a strong Team that knows not only how to make a movie, but also how to package it, develop it, market it and ultimately sells it. No matter how you get your funding, make your investors happy by delivering an excellent product, be it banks, sales agents, equity investors, co producers, buyers and the next time around will be easier. If you can make a film that gives even a small profit margin like 10%, you will be considered a good producer and creative talent with a future.