The production budget should not be available to the Producer until it is raised. For the safety of the investors it is necessary to place their funds in a holding account. I usually recommend that my clients prepare two production budgets; the first budget is a lower budget that would be the minimum amount that the movie could be completed; the second budget is the higher budget that the Producer would prefer to utilize. I then prepare a “high/low” offering to match the two budgets that are provided by the Producer/client. The movie can be produced for any amount between the low budget and high budget once the minimum budget has been raised.
These holding accounts are usually non-interest bearing.
If the minimum funding is raised, then the Producer transfers the funds into the production operating account. Any funds that come in after the minimum budget amount is released from the holding account are likewise released to the operating account on an as-needed basis. If a completion bond is required, the release of funds may be subject to a drawdown schedule, monitored by the completion bond company. If the minimum threshold is not met then all funds must be returned to the investors without interest.