This article is written by a Hollywood lawyer specializing in film finance.
http://www.forbes.com/sites/schuylermoore/2019/05/10/film-financing-with-loans
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There are those who like to constantly argue and (falsely claim) that films are all 100% equity securities finance clearly don’t know what they are talking about. This myth was also disproved on the TV Show “Shark Tank”. (Related episodes are on this blog feed) Especially those who have no securities to legally sell. Known as securities fraud or selling AIR.
You know, the one’s on the phony “Film Investor ” Facebook groups; using the 2 words investors and donations to an average of 400+ micro-cap 3-F’s to take at least 3+ months to bundle (together) a piddly $150K. Or offers to “buy my DVD that doesn’t exist yet”. Consumer retail product buyers & securities equity finance investors are 2 different things. My other favorite is “I have an mystery investor in an escrow account to match other investors”… or those deceptively asking for 10% debt capital finishing funds but are actually asking for 10% equity seed capital.
Low budget film funding below the “cost to benefit” ratio of professional investors is something that could be accomplished with 1 “cashless investors” for a total of up to $600K or $3M with 5 people and be done in 3 weeks. Brain dead simple.
Have said it before on this blog feed but the #1 source for film production finance is http://www.Filminvestmentbanking.com for 100 years. (Confirmed by IMDB credits)
Might explain why film producer Cecil B. DeMille was also a bank VP of Bank America in 1924 at the Culver City branch. Yes, the same Bank of America that funded well known films like; ‘Gone with the Wind’, ‘It’s a Wonderful Life’, and 10-Academy Award winner ‘The West Side Story’.
Webfilmschool.com (falsely claims) all films are 50% funded by 25 to 90 product placements with corporate logos on them. More gibberish from non-MBA’s that have never worked on or have been MeetingFundingApprovalCriteria.com for funding on Wall Street.
Pretending this was true for a moment and a call center could close 1 corporate agreement per week then it would still take at least 6+ months to secure only 50% funding. Call center staffing is labor & time consuming.
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In the real world this is how film finance is bundled:
65% debt capital + asset-based lending (ABL);
including (a) pre-sales minimum guarantees funding (in 30 days), (b) gap financing & LC’s, (c) 35% state collateralization for to $20M bank loans (d) bank production finance (see IMDB to confirm), (d) product placement (e) finishing funds , and then (f) P&A funding.
35% equity + government funding;
including (a) borrower skin in game, (b) government film tax credits, (c) registered equity securities finance; particularly DPO‘s. Now your actors, A/V crew, supply chain, theater-owners, and fans can be an investor in tradeable/monetizable securities AND with NO legal requirement to be accredited; which saves money on quarterly SEC audits. (IF stock is even required)
Remember; The word INVESTMENT comes from the borrower having a VESTED interest in his film. Everything else is AIR. Remember, if you are not in it to make a profit, then it is just a hobby. And your ability to consistently achieve 20% annual recapitalization of profit margin roll-over into your next film is the measurement of being both profitable and proving “skin in the game”. Which any real investor, lender, or funder will ask for.
P.S. 80% Government Matching Funds does exist under stringent guide lines. Keywords: “Sustainable” Local job creation and hard assets; like major recording set studio R/E.
And the person that heads that government department used to be a film producer with film credits titled from A to Z as confirmed by Wikipedia. The department head was nominated by and is currently a Cabinet member of the POTUS.
Every point made above has been disclosed before on this blog feed for over 10 years.
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It helps a lot to hire a US Vet-owned, registered government IR vendor like GLOBALCROSSROADSCAPITAL.COM to streamline dealing with any and all branches of the government when pursuing; tax credits, tax exemptions, tax deferments, government contracting, 35% loan collateralization, EXIM working capital guarantees , OJT labor wage $100K refunds, 80/20% angel matching funds, EB-5 investors, etc.
READ THIS and the CONTACT page link found in the heading under the title of this blog feed if you have a current IR/PR contractual customer service need and can prove ability for MeetingFundingApprovalCriteria.com.
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