9/3/2023 0 Comments Gap financesTo increase official development assistance (ODA) from the current flat trend of around $160 billion per year.To aggressively pursue efforts aimed at reducing or eliminating trade barriers that inhibit access to markets, impede the movement of goods and services across borders, and discourage foreign direct investment.1 While that represents an enormous opportunity, it also prompts the question of what options exist to bridge the current gap in financing.Īt least four options exist for filling that funding gap: It also estimates that achieving those goals could open up as much as $12 trillion of market investment opportunities in four categories-food and agriculture, sustainable cities, energy and materials, and health and well-being. For legal advice, you should consult with an attorney concerning your specific situation.įorbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives.The Business and Sustainable Development Commission, Chaired by Lord Mark Malloch-Brown and comprised of business leaders from around the world, reports that it will likely require around $2.4 trillion a year of additional investment to achieve the sustainable development goals (SDGs) by 2030. The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. Consequently, it’s wise for filmmakers to understand their options as they navigate the financing and legal logistics for their film. As I mentioned above, even minor missteps can be costly, laborious and, in some cases, lethal to the project. While filming a movie is a creative process, it is also a complex business endeavor with which many producers might not be familiar. There are film commissions in most jurisdictions that will work with producers to ensure these conditions are met. In order to qualify for the incentive, each state or country will have certain requirements for filming in that state, such as hiring local talent. Many states and foreign territories provide tax incentives to productions that film in their state or country, which can come in the form of a tax credit or deduction and vary by territory. Bridge loans are the riskiest and most expensive option, with some interest rates reaching as high as 1% per week and upfront fees of around 10%. They can also charge upfront fees and may require a completion guarantee.Ī bridge loan, on the other hand, does not require a completion guarantee and can lend preproduction expenses until such time as a presale or gap financing comes through, at which point the bridge loan is paid off. (Banks typically loan half the amount of that estimate, in my experience.) Gap loans are often riskier than loans secured by presales, so banks can demand that they be senior to all other funding until fully recouped. A gap loan covers the shortfall between what a film costs to produce and what it secures in presales these loans provide between 10% to 20% of a film’s budget against an estimated value of all the distribution territories that remain unsold. Two other types of loans are gap loans and bridge loans. Banks require a completion guarantee prior to giving a producer a loan to ensure the completion and delivery of the film to distributors (thus triggering the payments). When the finished film is delivered to distributors, the payments are due, and the bank loan is paid off from the amounts paid under the presale agreements. Once a producer has presale commitments from distributors, they can then leverage those contracts to secure bank loans, which may constitute up to 75% of the minimum guarantee (the value of the presale contracts). In addition to other financing received, a producer might choose or need to take out bank loans to finance production. However, a contract that commits a distributor to pay a certain amount when the film is complete is “bankable,” which means it can be used to apply for a bank loan. In that case, the deal is usually known as a “negative pick up” because the filmmaker is paid upon delivery of the completed film negative. A distribution deal might include cash advances to be paid upfront or in increments during the production process, with full payment made upon delivery.
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