There are a variety of resources available to finance your film, however your approach to financing will depend on your project’s style and budget. In regards to style, this could be determined in a number of ways including how your film’s story is told from a production standpoint.
On a large scale production the story could be told by using visual effects, multiple locations, and a star studded casts. On a smaller production the story could be told by focusing on strong character development, using a single location, and an unknown casts.
Now in regards to budget, when writing your script you need to be mindful of certain costs associated with each development stage leading to your film’s release date such as: pre production, production, post-production, marketing, and distribution.
These costs determine budget, which identifies the film’s financial needs, and specifically how its story can be told. Financing however, shouldn’t hinder creativity if the funds acquired are not adequate to support the budget entirely.
This is where sacrifices have to be made to limit production costs but not creativity. For example there are films produced with sub 120K budgets that have yielded mainstream success such as Paranormal Activity, Clerks, and Night of the Living Dead to name a few.
We mention these films because each of them were independently financed and their style of production is minimal, yet still creative. Paranormal Activity was produced for $15,000 using inexpensive camera equipment and a single location.
Clerks was produced for $27,575 with 10 credit cards that writer/director/producer Kevin Smith had at the time and the project was filmed at a convenience store. Night of the Living Dead was the larger budget out of the bunch at $115,000 which was independently financed and filmed on weekends by a small group of people in Pittsburg, PA.
This goes to show that a large financial investment isn’t required to produce movie magic, however budget is still a factor to get a project off the ground and onto the big screen. So what we’re going to do is dive into a variety of film financing options that you can use to fund your next project.
The financing options that we’ll discuss include public methods, private methods, and unconventional methods. This includes grants and tax incentives which are public methods; pre-sales, negative pickup deals, bridge financing, and individual investors which are private methods; as well as product placement and crowdfunding which are unconventional methods.
Grants are offered to subsidize production costs and in some cases fund completely, in return for specific criteria required of the project. For example a government grant may be offered in a specific region to stimulate job growth in the area, which means that the film’s production workforce is required to be occupied by local labor.
Other grants offered are subject to all types of conditions including geographical location, film genres such as documentaries, short films, narratives; and any other condition that is considered legal.
Tax incentives are closely related to film grants, in regards to specific criteria required for the film to receive funding. This comes in the form of tax or cash incentives for labor, production costs or services.
We were able to find a source that details the specific nuances in each tax incentive, per state in the US here at kpmfilm.com. However, these tax incentives are provided across the globe and aren’t exclusive to the United States, which is beneficial if a project’s story demands a foreign site for production.
A pre-sale is a distribution agreement, where a project’s distribution rights are sold to a foreign distributor for a pre-negotiated fixed fee. The foreign distributor will pay a percentage upfront to the producer and then provide the remaining funds once the film is completed and delivered to the distributor.
This agreement is used in conjunction with a lender to acquire financing because this provides the necessary security for the lender’s investment. This is due to the fact that that the distributor is obligated to provide funds once the film is completed which ultimately guarantees the lender to receive their money back, in most cases…
The distributor includes a caveat to protect their investment as well, given that films are projected to succeed based upon specific criteria such as directors and actors involved, as well as the film’s genre.
A pre-sale agreement is subsequent to the project’s ability to deliver on these aspects of the film. If any of the project’s promises are not delivered upon, the distributor has the right to opt out of the deal per the conditions in the agreement and the financing falls apart.
Negative Pickup Deals
A negative pickup deal is similar to pre-sale financing in regards to timeframe, but differs given that the project’s producer pre sells rights to the creative work itself rather than its distribution. Funds are secured prior to the project’s production, however these funds will be made available at the completion and deliverance of the project for a fixed amount agreed upon in the contract.
This means that the producer is guaranteed to sell the film but still has to acquire financing from a lender. The negative pickup deal provides the lender with collateral to finance the film’s production, due to the fact that the funds be will recouped once the film is completed.
Bridge financing is an interesting tool in order to solve an intricate issue when a producer is attempting to finance a project. This type of financing comes in handy when a producer is in the middle of acquiring financing from a large investor, which will cover the entire project.
The issue however, is that the investor will not provide funding without the guarantee that a specific actor is going to be involved in the film, and the actor won’t agree to sign on without the guarantee of payment.
So during this time the large investor will provide a promissory note for payment but the talent requires actual capital to solidify the deal. So in this case the bridge financier will provide a short term loan using the promissory note as collateral, and once the actor is acquired the large investor releases the funds which in turn pays back the short term loan, with interest of course.
An independent investor is exactly what it sounds like, an individual interested in the film industry, who’s willing to fund projects that meet certain criteria. This is where it’s important to break down the project with a line producer whose sole job is to go through each line of the script to calculate costs.
Independent investors will also be interested in marketplace analytics, audience analytics, a bondable schedule and budget, and a distribution plan, in order to secure their investment.
There are a variety of ways to locate individual investors which includes the internet, social platforms, and film festivals. Film festivals are great opportunities to meet investors looking for new projects to fund, as well as fellow creatives in the industry, and they’re also great for testing your film in the marketplace.
There’s a great site that gives filmmakers the opportunity to enter their project in upcoming festivals and showcase their work. It’s titled filmfreeway.com.
Product placement is where a brand provides financial compensation in return for marketing of their product in the project. For example the latest season of Stranger Things was full of Coca Cola advertisement and this is smart to do, given that this greatly reduces production costs depending on the size of the brand and amount of product placement in the project.
This is the last financing method that we’re going to cover which is crowdfunding. This has been a useful method in order to fund a project using community support.
Websites like KickStarter and IndieGoGo have provided a platform for new filmmakers to share their ideas with the marketplace, and in a lot of cases this type of community funding allows creatives to produce the type of film they want to produce. There’s no limitation imposed by a studio or investor, which provides the filmmaker with creative freedom.
Hopefully this lists for film financing guides you in the right direction for your project, however please use this as a starting point to do further research on financing options to fund your film.
Remember that every situation is different and your individual financing needs will depend on your film’s budget throughout each stage of your film’s development.