The list below represents a number of ways in which films have been and are financed. Some, of course, are not recommended.
- Obtaining a Check from a Studio. This is highly unlikely for your average independent filmmaker.
- Credit Cards. One Hollywood movie was totally financed by credit cards and went on to make money, as well as a career for its producer. Not recommended.
- Selling your Body for Scientific Experiments. One motion picture was reportedly financed in this manner. Not recommended.
- General Partnerships. A group of producers can get together, put up their own money, form a partnership, and make a movie. This is not recommended due to the fact that producers generally do not put up their own money to make motion pictures. Also, with any general partnership, if one partner creates liability for the entire partnership, all partners are individually liable for the whole amount. Therefore, you do not want to be the “rich” partner.
- Family and Friends. Not recommended. This could damage personal and familial relationships.
- These funds are usually only available after equity or other financing (i.e. presells, monetized incentives) are in place, a distribution deal has been found with sufficient collateral and completion bond has been established. Furthermore the bank’s very high rates, points and fees have to be paid. Also bank funds are the last money in and the first money out. Such loans are extremely difficult to obtain and can only be used in conjunction with other financing, not as a sole source of financing for a film. Also, if foreign rights are pre-sold as collateral for a bank loan, then the investors will generally not see any money from those foreign territories until the bank obligation is completely satisfied.
- Limited Liability Company (LLC). An LLC is a legal entity formed under a statute, other than a partnership or a corporation statute that allows an association of owners or individual owner to carry on business with none of the owners having liability for the obligations of the business. The LLC creates limited liability for its owners (like a corporation), freedom to structure management rights and financial interests in the entity in virtually any configuration the parties wish (as in a partnership). The LLC will be treated as a partnership for income tax purposes. The income, gains, losses, deductions, and credits of the LLC generally will flow through to its members for reporting on their personal tax returns. An operating agreement or member agreement sets forth the agreement of the members of the LLC much in the same way a partnership agreement sets forth the agreement of the partners. These agreements provide terms regarding capital contributions, profit and loss distribution, shares of distribution, management and voting rights.
- Many states and countries provide incentives if a film is shot within the state or country. These incentives can provide a substantial portion of the budget (usually 20% to 25%) and can be monetized. If not monetized, they may also be used to start to repay bank loans or investors once they are received.