Without sufficient funding, your independent film production is either dead in the water or destined to be a zero-budget home movie probably not worth attempting in the first place. And if you are an independent producer you may not necessarily know the right people in the right places, or have that ‘gift of the gab’ when it comes to wheeling and dealing investment opportunities, making your investment goals that much harder.
So, we wanted to lift the lid on this stress-inducing issue and ask the question, how does one find investment to fund an independent feature film project? We thought we’d start by taking a look at the different types of investment that an independent film producer could potentially seek out.
Types of funding
This type of funding model involves an investor contributing money towards a film project in exchange for an ownership interest in the film and recouping their investment from sales made from the film’s distribution. The main questions a film producer will often have to field from their investment partner are
- How much ownership will they be buying
- How will they recoup their investment
- How will they see a profit
Before putting pen to paper it is highly recommended to speak with an attorney and provide your investment partner with full transparency, advising them of the risks involved in investing in feature film projects, as investors rarely receive a return on their investment.
Pre-sales agreements are contracts that are made with distributors prior to the start of production. These agreements are assessed by the distributors and are based on a perception of how well the project will fare when it hits the market. Factors that the distributors will scrutinise include the script, talent attached to the project, and how the producer intends to market their film.
Once the agreement has been made and both parties have signed the contract, the producer can either:
- Apply for a bank loan using the pre-sales as collateral, or
- Receive a direct payment from the distributors at a discount
The producer will then need to either repay the loan based on the pre-sales or direct payment from the distributors before they can make a profit on it. The producer will likely also have to personally guarantee the loan in the case of the film not being completed. Like an equity deal, it is strongly recommended to get advice before signing anything.
Loans/Gap or Bridge Financing
Loans are only typically provided to a film producer after alternative financing has been secured, and are often only used as a bridge between the funding already in place, and the remainder needed to meet the budget requirements. As in the pre-sales model, the producer puts a lot of pressure on themselves as they have to personally guarantee the loan, and they are liable to cover any shortfall in loan repayments that the profits of the film fail to cover.
Tax credits can be a great way to fill any gaps between the amount of funding a project has already acquired, and the remaining amount needed to meet the full budget requirements. Tax credits are issued by the various states which more often than not require a certain portion of the film to be shot in the state that is issuing the credits. Not only that, a producer would also typically have to recruit a certain number of employees/crew members locally and source equipment from local vendors in order to meet the tax credit funding requirements.
Although a lengthy process, tax credit funding can be highly beneficial for a production company’s budget, because – depending on the state – they may only need to raise 75% of the film’s budget.
Crowdfunding is the art of acquiring investment through online marketing campaigns using platforms such as Facebook, Indigogo Patreon, and Go Fund Me. The funds raised with this type of method is likely to only be a drop in the ocean compared to the total investment requirement, however, it can be a good way to tap friends, family, and acquaintances for small donations. Enough small donations can amount to a decent starting amount, but you will still likely find yourself well short of your production’s total investment needs. Donations do not need to be repaid, plus you can make it fun for your investors by providing giveaways such as merchandise related to the film and credit on the film itself for example.
This is an extremely risky method of funding a film production, as you are gambling your talent and crew’s time and labour on the potential success of your film. Not only would you be deferring your fees as a producer, but you would also be deferring payment of fees for your hard-working crew, and on-screen talent who would have to be willing to work for free in the short term, under the basis that they would be recompensed once the film is distributed and, ideally, starting to make a profit.
Where to find funding
Screen Australia is a Government agency at a Federal level that supports the development, production, and promotion of content for the screen in Australia, including independent feature films. Formerly known as the Australian Film Commission (AFC), the Film Finance Corporation Australia (FFC), and Film Australia Limited, Screen Australia has been funding the development of Australian productions under its current name since 2008 upon the establishment of the Screen Australia Act 2008.
Contacting an Investment Manager and Program Operations Team
Before applying for funding from Screen Australia, they recommend you make contact with one of their Investment Managers, in addition to the Program Operations team to discuss your project and raise any questions you might have in regard to eligibility. They will also help you to ensure you have all the required supporting material ready prior to making an application for funding.
Summary of Funding Support
- Screen Australia supports feature films with budgets under $20 million dollars
- Productions are required to have a marketplace attachment in their crew
- Documentaries are not eligible for funding
What funding is available?
Generally, Screen Australia will contribute up to 65% of the total production budget, and the total investment is capped at $2 million dollars.
Productions often work in collaboration with production companies overseas, which more often than not involves production taking place both locally and overseas. When producers are co-producing a film with an overseas production house, however, the 65% contribution only applies to the Australian component of the budget.
In Australia, producers can apply for a tax rebate or offset on the budget of their film, but applicants seeking funding from Screen Australia do not have to have lodged their application for their Producer Offset Certificate prior to applying for funding through Screen Australia. Always check with your investment manager for guidance on the most appropriate course of action, but generally, you can apply for Screen Australia funding with or without the lodgement of an application for the Producer Offset.
The Enhancement Fund can assist productions that are in post-production, specifically the rough cut stage, but need additional funding for reshoots, music licensing, or additional visual effects for example. Producers seeking this additional funding however need to demonstrate that the edit of their film is progressing well and that they aren’t simply out of funds due to poor budgeting in the first place.
Who Can Apply
In order to be eligible for funding, film projects need to feature length and intended to be screened in theatres, and it is an expectation that the film is written and directed by an Australian citizen or permanent resident.
Producers seeking SA funding need to provide a complete financial plan that not only includes a distribution deal to screen their film in Australian theatres from a domestic distributor but also an offer to represent their film for Rest of World sales that incorporates commercial terms set by an appropriate international sales agent.
If you don’t already have some form of funding in place prior to approaching SA for funding, you will not be eligible for funding. And if you want to improve the chances of your funding application being accepted, you should familiarise yourself with SA’s Terms of Trade, which are a detailed set of guidelines that cover areas such as contracting, paperwork, and reversion of recoupment entitlements.
If you are seeking up to $1 million dollars in Screen Australia funding you can submit your application at any time. If you have a big budget and require a greater than $1 million dollar contribution, your application will first be channeled through the SA Board for final approval. Checking the deadline dates for submission is critical because missing the deadline dates can mean you also miss the next Board Meeting, which will then delay the review and approval of your application.
As part of the application review process, key production personnel such as the Writer, Director and Producer could be called upon to attend an interview, and are therefore expected to have availability to attend this interview.
When reviewing your application for funding for your independent feature, Screen Australia will be taking into consideration several equally weighted factors such as:
- story documents (in relation to the Enhancement Fund) and centres around the quality of writing and whether the project is distinctive in its own right
- whether your project contributes towards diversity and inclusion
- audience factors such as the project’s target audience, how the production intends to reach that audience, and how much it could potentially appeal to a significant audience both within Australia and overseas
- The skills, talent, experience, and previous achievements and track record that the key creatives posses
- How much market interest the production has as well as funding already raised, and what is the likelihood that Screen Australia will recoup its investment in it.
Indigenous Content or Participation
If your production is going to involve working with members of the indigenous community, it is highly recommended you familiarise yourself with a comprehensive guide called Pathways and Protocols, a document researched and written for Screen Australia by lawyer Terri Janke. The guide contains:
- Concepts of communication
- Copyright law and Indigenous communal rights
- Case studies on working with indigenous content
- A guide to what rights indigenous communities have when working on film productions
Click here to access this guide for free.
Terms of Funding
If your application for funding is successful, you will receive a Letter of Approval outlining the amount and duration of Screen Australia’s contributions.
If Screen Australia’s contribution is $500,000 or less you will receive that in the form of a grant, which means Screen Australia doesn’t take a share of receipts. So in these circumstances, Screen Australia doesn’t require any funds to be repaid to them, other than what’s set out in SA’s Terms of Trade.
If SA’s total contribution to your production is above $500,000 the funding will be in the form of recoupable equity investment, which will adhere to their Terms of Trade.
One of SA’s conditions of investment is that productions allocate an attachment to their production. This is great for enabling young and emerging practitioners to gain a foothold in the industry by giving them the opportunity to work on large-budget productions under the wing of an experienced on-set mentor. The attachment should also reflect the theme or content of the production, which opens the door for people in indigenous communities, those with disabilities, or who identify themselves as LGBTI+ to be part of the filmmaking process and gain some valuable experience.
One aspect of your application that Screen Australia will be going over with a fine toothcomb is your budget.
At a high level, SA will assess your budget to ensure that what is represented on the script is achievable with the budget you have submitted. They will expect any fees in your budget to align with industry standards, and for it indicates how much of Screen Australia’s overall financial investment the film should feasibly be able to return.
Marketing and Publicity are two other areas you’ll need to cover in your budget, particularly how much you will need to spend on publicity during production, in addition to a variety of marketing factors such as Photography, movie trailer, poster art, test screenings, and captioning.
A few years ago this COVID-19 would not be a feature of a production budget. But unfortunately, due to the extensive and ongoing impact the virus has had so far – and continues to plague us with – applications now being submitted to Screen Australia will also need to include a COVID-19 Safety Plan and Risk Assessment.
Avant Group is a consultancy with offices in 4 capital cities that specialise in government grants, business advice, technical research, and marketing strategy. They offer producers and filmmakers funding via their Producer Equity Program, which is a direct payment of funds equal to 20% of the approved budget and is typically granted to producers of low-budget Australian documentaries.
Producers applying for this program need to demonstrate they have a confirmed finance plan of at least $125,000 up to $500,000, and not be eligible for the Producer Offset, PDV or Location Offset.
Producers can apply for this funding at any stage of the production process, but it must be Australian at its heart e.g. it must contain a significant amount of Australian content, and it must be produced for distribution to the Australian public.
Producers also need to have in place a commercial arrangement for distribution such as a broadcast license, VOD agreement, selection to an Australian film festival, or cinema on-demand screening.
Film Finances Australia
FFA, or Film Finances Australasia is a local representative of Film Finances Inc, a corporation headquartered in Los Angeles, and a leader in providing completion guarantees/bonds to the film and television industries in Australia and globally.
Completion bonds or guarantees as they are otherwise known, are pretty much insurance policies that you can take to your financiers/investors that assure them that the project they have invested in will finish not only on time, but also on a budget, or their investment will be returned to them.
Investors will often be more re-assured by production companies that approach them for investment who already come with that peace of mind in the form of a completion bond, than producers who don’t.
If you want to get your indy film financed, get a guarantor on board as early in the process as possible.
Learn to Film is a hub for training and education for ambitious content creators who want a career in film, video or television. Whether you are looking to specialise in a certain area such as producing or video editing, or want to learn about the whole production process, head on over to our courses page for more information.