Film Financing.

Films can get funding from four different types. Government grants, Tax schemes, Debt finance and Equity finance. The funding for films is thought about pre-production - before the film is made. It has to be this way so the people in charge of producing the film know who needs to be booked, e.g cameramen and so on. They also have to think about the film props and all of the people involved and starring in the film need to be paid. If the film has unknown actors and actresses starring in it then the producers will go for a Government grant as it will be seen as up and coming. Once the film is produced and money is coming in, they then repay the investors from that, also the DVD sales. However there is now ways of protecting against loss of the investors assets. As with any film, it is difficult to predict the revenue that the film will bring in, so the main way to tell is when the film comes out, will it be rivaling with more popular talked about films that are coming out in cinemas? also the public taste and the quality of the actors and cast. Tax schemes, which means selling to a wealthy individual and charging a huge amount of tax and that individual pays the producer of the film money to obtain the tax deductions. The individual with then most likely go on to become the legal owner of the film or have certain rights to do with the film but the producer will still go on to be the owner of the exploit rights of the film. In debt finance, everything still has to be done before the actual film is made but once the deal is made, the distributor can insist on delivering some of the content and cast. If a material alterisation is made, the financing could well collapse. While signing the pre-sale contract, the buyer will have to pay a 20% deposit to the films collection account. Usually tax advantaged films come with little risks, for example in equity finance, usually the money is recouped by a combination of federal and state tax incentives, which obviously eliminates most of the risks. In debt finance, a lender such as the bank, gives the person in question money in agreement that they will pay the money back in a certain amount of time. The bank will then make interest on the loan, even if the film doesn't do well.. They must still pay the bank the amount back. However the borrower does stand to make more of a profit using debt finance rather than equity finance as equity finance requires the film-maker to sell interests in either the film or the film company in exchange for funding. In every case, the investor will make far more of a profit than the lender.