The guidelines for Entertainment film financing vary depending on the project and whether third parties are cash flowing part of the strike price (actual budget less financing costs and legal fees) for the project.  Our partner is strictly a lender, they will try to mitigate as much of the creative risk associated with a film project as possible; thus, repayment of the Bank's loan cannot be tied or dependent entirely on the project's commercial success.

The sources of repayment of the loan must be identified and quantified before the loan is approved, documented and production begins.  These sources must be sufficient to cover the strike price, all loan fees, documentation costs, estimated interest on the life of the loan, including a provision for events of force majeure, and the premium for a completion bond as well as any budget contingencies called for by the bonding company. If third parties such as equity investors are providing cash flow for a portion of the project budget, the amount of the loan will be adjusted accordingly. In all cases, the full amount of the bank's loan must be adequately collateralized by firm payment obligations and/or estimates of future sales. 

Acceptable collateral may include escrowed cash, marketable collateral held by the bank in safekeeping, standby or commercial letters of credit from acceptable financial institutions, and distribution or licensing agreements with minimum guaranteed advances payable on or as a result of delivery by credit worthy domestic or foreign sub-distributors.  The credit worthiness of some third party payors may be enhanced by the use of standby or commercial letters of credit from acceptable financial institutions.

In addition, our partner is one of the few lenders that provides “GAP” financing on film and television projects, wherein the budget (including fees and interest) for the project is not fully covered by pre-sale contracts or other forms of collateral.  Currently, our Gap appetite is at most 20% of a “realistic” film budget provided there remains sufficient unsold rights.

1. Completion Bond Letter of Interest.
2. Sales agent company name.
3. Valuation of unsold rights.
4. Budget.
5. Weekly cash disbursement schedule to allow for calculation of expected interest.
6. Cast in place.
7. Script.

In summary, our partner is generally looking for a project with: 1) a producer that has a successful track record; 2) a script with a “recognizable” cast attached; 3) sales forecast from a credible sales agent; and, 4) contracts from credible distributors (domestic and foreign).