| Interim Financing: What, Where and How |
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| Philippa King | |
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Page 1 of 3 To understand the importance of interim financing, imagine this scenario: your payment schedules say you will be paid when you deliver the completed movie to the distributor… but you can’t deliver the movie until you finish it… and to finish it, you need money. Right now.This is what’s known as a cash flow problem. Cash flow is all about outflows, inflows, and their relationship to each other. In filmmaking, outflows are all the expenses incurred in making the production, while inflows are the committed funding that will be received as specified in the financing agreements of the project (both how much, and on what payment schedule). Outflows start when pre-production starts and don’t end until you deliver the film. Inflows, as in the scenario above, may not begin until you deliver the film. What do you do in the interim? You depend on another source – interim financing, for example. Interim financingWhat it is…Interim financing is a method of advancing cash to the production, so the expenses of production can be paid. It takes the form of a fully secured loan, usually obtained from a bank but possibly from other sources (see Sources, below), which a producer can obtain once the film’s contracts are all in place. The loan is fully secured by contracts, such as a funder agreement that provides future payments upon completion of various deliverables. Tips
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