News & InfoEP StoreAcademySupportCommunityProducts by Country
Blog Home

The Beginner's Guide to Production Financing

What to know before starting your next film or television project
April 6, 2021

John Hadity

EP Blog-WIDE-John Hadity-beginners guide to production financing

Ready to bring your script to life and get the cameras rolling on your next project? Start with a solid financing plan, mapping out the best funding options available to you. Whether you’ve been in the entertainment industry for decades, or you’re just starting out, this guide will help you on your way to financing your project like a pro.

Understand Your Financing Options

If you want to finance your film or television project you’ll first have to decide which option, or blend of options, will best fit your production. Key to this decision is understanding what’s available to you. A good place to start is with the four most common forms of financing:

1. Soft Money

In the film and television financing world, this generally means financing that does not need to be paid back, and includes incentives like refundable or transferable tax credits, rebates, and grants (from government authorities, nonprofits, or foundations). If you're new to incentives, visit our guide to production incentives.

When it comes to incentives, productions should always be aware of the requirements to claim a tax incentive in a specific jurisdiction. Are you considering a state that requires you to complete the project there, or in other words, are you considering a spend state vs. a completion state? In a “spend state” as long as you spend your money there, you can earn the credit whether or not you finish the project; other states will require you to complete the project there in order to be eligible for the credit.

If grants are the preferred route of financing, connect with organizations whose work aligns with the story of your script. If you’re creating intellectual property that completely falls within the mission and vision of a foundation doing work educating people in the same space, it’s worth the ask for funding. Nonprofits can even serve as fiscal reps for a project, handling the grant money and reporting, as long as the production is within the mission statement of the foundation.

2. Equity

This is financing from outside investors who contribute to a project in exchange for part ownership, and a cut on profits after sales. It’s a risky business investing in film, so be sure to bring on a lawyer to lay out all the terms and payment structure that will accompany the equity investment.

Transparency is key so investors need to know exactly what to expect and so you’re not held liable, especially if the film doesn’t make money in the end, which is the case more often than not with independent projects. Three questions to ask when planning out an equity investment: 1) How much of the project will the investor own? 2) How do you plan to pay them back? 3) What kind of potential profit might they make?

3. Traditional Loans (also known as Senior Debt or Gap Loan)

There are multiple different kinds of loans available for financing a project. You can get a loan against a tax credit, a loan from a bank or financing provider like Entertainment Partners, a loan against a minimum guarantee, or a loan against projected sales on territories.

An important consideration before approaching a bank or other lender for a loan is the completion bond.

Completion bonds (also referred to as Completion Guarantees) are a form of insurance purchased by the production to ensure the project will be completed on time and on budget. This protects the project from running out of money before completion which is especially important when working in jurisdictions like New York State, which requires the project be completed before they will issue the tax credit certificate. One of the first questions a lender will ask when reviewing a loan application for this funding option is, “Do you have a completion bond?”

It is always recommended that producers do their homework ahead of time to determine whether they need and qualify for a completion bond.

In the case of projected sales on territories, you’re looking to finance the anticipated value of a project on a worldwide basis and which will require sales estimates from a lender-approved sales agent, based on territory, in order to pursue a loan. Once the desired estimates are obtained, a bank or lender may say ‘yes’ or ‘no’, or require additional conditions, such as your sales agent selling the project in a few territories to vet if the estimates are accurate.

4. Mezzanine Loan

If there is a shortfall in traditional funding, Mezzanine Loans are also available to help finance a project. While these loans may seem attractive, they should be considered carefully and not as your first choice of funding options. Because Mezzanine lenders get paid back following the Senior Debt, and take a bigger risk, they often have higher interest rates.

Productions can secure Mezzanine Loans from private equity firms, hedge funds, private wealth desks, or other privately financed companies who are willing to contribute to a project for a high risk, high reward contribution.

After you’ve estimated your tax incentive money, how much equity you can raise, all loans that you might be eligible for, and however much you’re able to raise in crowdfunding, you may still have a short fall. Only then should you go out and look for a Mezzanine Loan.

Look at the Bigger Picture

As you weigh out your production’s financing options, it is important to remember that additional factors may play a large part in your decision making.

Consider what distribution rights you are giving away in exchange for cash

There is real currency in the distribution rights of a project, especially in the international market. In exchange for financing, productions need to weigh what kind of rights they are giving away, sometimes in perpetuity, and weigh all the collateral of a project before signing on with a distributor for financing. As a producer, you have to look at the cost of the project and say, ‘what am I giving away in exchange for this money? Is it enough? And what is this going to look like financially two years from now?

It may also be worth shopping around for a variety of distributors.

When you look at the value of a film, you have to look at it from the perspective of what is this film worth on a worldwide basis...not just in the US. If you are selling your movie to a North American distributor, who only wants North America, you still have the opportunity to sell the movie in Europe, Asia, Africa, etc. There is a real value in the international rights to your project.

Plan your cash flow needs

Anticipating the timing of cash needs is crucial during production to avoid jeopardizing tax credits. Incentive programs track productions closely on how they allocate the money to ensure it’s spent locally and that local vendors are paid on time.

A lot of producing and production accounting involves cash management. Not anticipating cash needs, or the timing of those cash needs, can be crippling.

Being able to look at cash flow and see if there is going to be a problem down the road is essential for a production to stay on track with their budget. Having a strong financial team, such as EP, to anticipate these cash flow needs can make all the difference.

Stay up-to-date on changing legislation and incentive programs

It’s important to be aware of how laws and incentive programs are changing since it could affect production budgets.

Changing legislation or incentive programs can significantly impact a production’s budget, so be aware of what’s happening in your filming jurisdiction. For help with this arduous task, look no further than EP’s Production Incentives site, which is consistently tracking proposed changes to legislation and providing regular updates with the latest information. You can also sign up for our monthly newsletter to stay informed about changes that may affect your financing opportunities.

To learn more about the Incentives Group at Entertainment Partners, and how we can support your production with loan opportunities or other financial questions, visit our Production Incentives page, or click the Contact Us button.

Related Content

Master Series Square Thumbnail-Film Financing-Crowdfunding

Film Financing Explained: Crowdfunding

9/8/2022
Emily Best (Seed&Spark), Stacy Bradford (Indiegogo), and producer Zach Fineblum join us to discuss the ins...
Watch
EP Blog_SQUARE_Creating a development budget

The Beginner’s Guide to Creating a Development Budget

10/18/2022
Before you start the filmmaking process, learn what basics you need to budget for to get your idea off the...

Film Industry Booms in Buffalo

9/20/2022
Western New York draws top filmmakers with expanded tax incentives, new soundstages, and architectural...
EP Webinar Panelists - US Production Incentives Update

US Production Incentives Update: New and Expanded Programs in 2022

8/19/2022
Film commissioners Colleen Bell and Sandy Lighterman, and production executives Jay Roewe and Ashley Rice,...
Streaming platform on tablet device

The Evolution of Residuals: How Streaming Changed the Model

8/11/2022
Understanding how residuals payments are calculated for new content on streaming platforms.
dollar signs representing digital crowdfunding

The Beginner’s Guide to Crowdfunding

7/26/2022
How filmmakers can leverage the power of social networks and online platforms to build buzz and secure...
EP Blog_SQUARE_Wes Hagen

Meet the Location Manager

7/7/2022
A conversation with award-winning location manager Wes Hagen ('Ozark,' 'Hidden Figures.')
Oklahoma route 66 sign

A New Frontier in Filmmaking

5/5/2022
Oklahoma is becoming a production destination, thanks to new incentives and infrastructure programs.
KJ Lamb and Simon Donovan

Empowering the Next Wave of Production Accountants

5/2/2022
The EP Production Portal team was delighted to participate in the biannual Netflix Assistant Production...
Master Series Panelists-World Revenues, Foreign Sales, Senior Debt

Film Financing Explained: World Revenues, Foreign Sales, and Senior Debt

4/27/2022
Learn how working with agents, international distributors, and gap financiers can all factor into...
EP Blog_The Race to Net Zero is On for Big Studios

The Race to Net Zero is On for Big Studios

4/20/2022
Film and television studios are embracing the green movement in a big way. Here’s what you can expect to...
EP Newsroom-Thumbnail-Portland Business Journal

How Oregon’s updated film incentive law could boost the local economy

3/29/2022
A new Oregon film and media incentive law could draw more movie productions to the state.
EP Blog_Marge Dean

Opening Career Doors

3/29/2022
How WIA President, Marge Dean, is shaping the future of animation and empowering underrepresented genders
International Film Financing panel-featured

Film Financing Explained: International Financing

3/10/2022
International production experts discuss how producers can utilize financing systems outside of the US,...
Digging Out of a Deficit-featured

Digging Out of a Deficit: What to Expect in the Second Quarter of 2022

2/25/2022
Federal and State Unemployment Insurance rates are rising. Learn how these changes will affect 2022 and...
EP Blog_SQUARE_International Film Financing

The Beginner’s Guide to International Film Financing

2/15/2022
What to know before you begin an international financing plan.

UK Production Incentives All Producers Should Know About

11/17/2022
Don't miss out on the UK's tax incentives, special programs, and national and regional funding...

Behind the Boom: Why the UK is a Hotspot for Production

11/17/2022
Explore the generous industry incentives, talent, and infrastructure available to productions filming in...

The Beginner's Guide to Pre-Selling a Film

11/8/2022
How to meet and work with a sales agent to pre-sell your next project.

The Production Accountant’s Guide to Year-End Payroll

11/1/2022
A step-by-step breakdown of how to navigate pitfalls and fix production payroll errors for a smooth year...

Preparing for Year End: Focus, Find, and Fix!

10/28/2022
EP's payroll tax experts share best practices to identify and resolve payroll tax errors for a smooth year...

Special Report: Entertainment – A Hollywood Education

10/24/2022
It’s the best of times and the worst of times for employment in the entertainment/streaming industry.

Special Report: Entertainment – Soundstage Gold Rush

10/24/2022
Hollywood is experiencing an ongoing boom that fills its Los Angeles production hub to overflow levels.
EP Blog_SQUARE_Streaming service

Streaming Services Expand to Latin America and New Audiences

10/11/2022
SVOD providers look to Latin America as a gateway to global stories and new subscribers
Western Canada

Production Tax Incentives in Western Canada Every Producer Should Know About

10/4/2022
Alberta and Manitoba offer film and TV productions competitive tax incentive programs and versatile...
Changes to UK right to work checks

Important Changes to UK Right to Work Checks

9/20/2022
On September 30, 2022 the UK rules around right to work checks will change. Here’s what productions need...
Topic: UK
More
EP Blog_SQUARE_New York

NY Convenience Rule Impacts Remote Production Workers and Film Incentives

9/13/2022
How remote employee payroll taxes apply to New York-based productions and if an employee’s physical...
EP Blog_SQUARE_1st AC Matt Sanderson

Meet the First Assistant Camera

9/7/2022
A conversation with 1st AC Matt Sanderson ('Everything Everywhere All At Once')
EP Blog_SQUARE_US Expanded Incentives 2022-2

A Record Number of US States Expand Filmmaking Incentives in 2022

8/25/2022
Your guide to the latest news in production incentives and film programs to come from the 2022 legislative...
EP Blog_SQUARE_New US Incentives 2022

New US Film Incentives Introduced in Arizona, Indiana, Florida, and West Virginia

8/23/2022
As production continues to boom, new tax credits and other programs welcome industry to new locations...
Los Angeles Times logo-sq

Hollywood production in U.K. soars to record levels as crews complain of burnout

8/22/2022
Spending on film and high-end television shoots reach record-breaking amounts as production activity...
EP Blog_SQUARE-Atlantic Canada Expands Incentives

Atlantic Canada Expands Film Incentives in 2022

8/16/2022
Enhanced production incentive programs attract industry to Newfoundland & Labrador, Nova Scotia, and...
Los Angeles Times logo-sq

Explaining Hollywood: How to get a job as a production accountant

8/10/2022
Mark Goldstein speaks to the LA Times about the high demand for production accountants
EP Blog_SQUARE_Penka Kouneva-2

Meet the Composer

8/2/2022
A conversation with award-winning orchestrator and composer Penka Kouneva (‘Revenge,’ ‘Pirates of the...
Mount Hood, Oregon

Building on Oregon’s Cinema Legacy

7/19/2022
How improved tax Incentives, job training, and production infrastructure is expanding the filmmaking...
5 Master Series panelists discussing Atlantic Canada production incentives-square

Production Incentives Update: Atlantic Canada

7/15/2022
Learn how productions can benefit from newly expanded incentives in Nova Scotia, Newfoundland & Labrador,...
EP Blog_SQUARE_filmmaking in new mexico

Forging the Future of Filmmaking in New Mexico

6/29/2022
As the film industry expands in the Southwest, New Mexico leads the region as top destination thanks to...
EP Blog_Jesse Wente

Supporting Indigenous Storytellers of Canada

6/21/2022
How the Indigenous Screen Office (ISO) offers advocacy and funding for First Nations, Inuit, and Métis...
Topic: Canada
More
Sian Richards and Queen Latifah-square

A Face Kit for Every Skin Tone

6/14/2022
Hollywood makeup artist Siân Richards is transforming the makeup industry for actors of every shade.
EP Blog_SQUARE-Pitching Reality Tv-blue

Pitching and Financing Unscripted Television

6/7/2022
Ready to sell your big idea for a reality TV program? This guide will help prepare you for the road ahead.
Jennifer Liscio

Spotlight: Jennifer Liscio, VP of Tax Incentives and Legal Affairs

5/31/2022
Meet EP's Canadian legal affairs and tax incentives domain expert, Jennifer Liscio, and learn how she’s...
EP Blog_Residuals and the streaming model

Residuals and the Streaming Model

5/24/2022
How residuals apply to historical content on new media platforms.
EP Blog_SQUARE_World Revenues_global currencies

The Beginner's Guide to World Revenues, Foreign Sales, and Senior Debt

5/17/2022
Learn how shopping your project around the world to secure funding commitments for distribution rights can...
EP Blog_SQUARE_Fighting Hollywood Stereotypes-TTEI

Fighting Stereotypes and Rethinking Representation

5/10/2022
How TTIE is advancing authentic storytelling in Hollywood by empowering historically excluded writers and...
contracting-in-a-covid-19-world-LC

Contracting in a COVID-19 World  

5/3/2022
The pandemic has affected how UK production companies contract crew. Here’s how to reduce the impact of...
terms-to-include-uk-contracts-LC

Terms to Include in UK Crew Contracts

5/3/2022
Common terms which studios and production companies include in their UK crew contracts.
Topic: UK
More
uk-gdpr-and-how-productions-reduce-exposure-LC

The UK GDPR and how Productions can Reduce their Exposure - Q&A with Sheridans

5/3/2022
Sheridans’ Associate Krishan Neelendra answers key UK GDPR questions from production companies and...
Topic: UK
More
cell phone with sticky note stating sign here

Six e-Consent Myths (and Why They’re Not True)

5/2/2022
Sheridans Associate, Sarmad Saleh, debunks some common e-consent myths.
Topic: Legal
More

Producing with Purpose

4/27/2022
Creative Producer, Kimberly Goodman ('Selling Sunset', 'Project Runway') shares insights on creating...
recycling conversation

Sustainability in Production: Q&A with Nikki Saunders

4/22/2022
Nikki Saunders on sustainable filming practices, COVID-19, and why carbon offsetting isn’t a...
EP Blog_SQUARE_meet the cinematographer-dan-laustsen

Meet the Cinematographer

4/12/2022
A conversation with Dan Laustsen ('John Wick', 'Nightmare Alley').
EP blog-square-tax day

Tips for Tax Day 2022

4/5/2022
Your ultimate tax filing checklist - the deadline this year is Monday, April 18th!

Georgia Proposes Capping and Prohibiting Sale of Film Tax Credits

3/30/2022
The changes, if signed into law, would cap the amount Georgia hands out in film and TV tax credits at $900...
Master Series Women in Animation-thumbnail

Women in Animation: A 3D View

3/24/2022
Marge Dean, Mandy Tankenson, and other women leaders from across animation come together to celebrate...
Bradley Cooper-nightmare alley

Meet the Assistant Director

3/16/2022
A conversation with Myron Hoffert ('Nightmare Alley')
EP Blog_SQUARE-Sound Mixer-Lora Hirschberg

Meet the Sound Mixer

3/1/2022
A conversation with Oscar-winning re-recording mixer, Lora Hirschberg ('Inception', Skywalker Sound)
meet-the-executive-producer-just-mercy-sq

Meet the Executive Producer

2/8/2022
A conversation with Mike Drake ('Just Mercy') on the path to becoming and EP, and the role of social...

Payroll & Finances

PayrollResidualsSmartStartNew SmartTimeProduction PortalEP On LocationSmartAccountingEP LiveSmartPOCASHétPayPaymaster Rate GuideEP Residency

Manage Multiple Productions

AssetHubSmartHubSmartHub Vault
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2022 Entertainment Partners. All rights reserved.