1 Sources of funding
The world of film finance is a complex one, and the financial solution differs from film to film. Perhaps it’s best to let a lawyer explain.
Charles Moore is a film lawyer based in London. Here’s his step by step guide to sources of film funding.
Download this video clip.Video player: Video 2 Charles Moore talks about sources of film funding
Transcript: Video 2 Charles Moore talks about sources of film funding
End transcript: Video 2 Charles Moore talks about sources of film funding
There are many different types of finance plans, and there are many different types of financiers. So the various options you have as financiers for a film are distribution finance, where the producer goes straight to a distributor and makes a pre-sale. That could be the distributor takes 100 percent of the rights and pays the whole thing, which is the simplest form of film financing. Or the distributor might just come in and say they'll take a certain territory, and put up an advance for that territory, and that could be cash flowed during production, or it might not be cash flowed.
It might be paid on delivery, in which case you then need a bank to come in and discount that distribution agreement.
Then there are other types of financing. There is obviously equity financing, which can be in the form of public sector money, which is BBC films, if you like, Film4, BFI. Regional funding, such as people like Screen Yorkshire. They all come with their own parameters. There are some funds in Canada, for example, or Germany where they won't expect to sit alongside harder equity. They'll go underneath. There's different layers.
And then you have, obviously, private sector money, which is very hard to come by in the UK. But individuals who might want be wanting to make the most of the EIS system in place, which is where the individuals will be getting a tax benefit for putting money into the feature film production or distribution, and again, those investors will be treated as equity investors.
Tax credits are an absolutely vital part of all film financing, and the tax credit regime is different in different countries. In the UK it's a very clean and simple mechanism where you spend the money in the UK, and you get a tax credit at the end. So you have to then find someone to cash for the tax credit. Sometimes it might be a bank, and then sometimes it might be a distributor.
There are, as you see, there's a whole swathe of different types of financiers which are possible, and of course, depending on the feature film and who comes together, you then have to make sure that all their interests are aligned.
Interactive feature not available in single page view (see it in standard view).