arrow_drop_up arrow_drop_down

The process of
Flim making and Financing

The essence explained

The process of film production can be divided into four stages

1 - Development and packaging:

     Project initiation, development of story and script, recruiting talent;

2 - Financing:

     Attract financing for the start of the production and all consecutive steps;

3 - Production:

     Pre-production (initial shootings), principal photography, post production;

4 - Distribution:

     Cinema’s, home video, video on demand, TV.

Item no 2, Financing, can be organised in several ways

  • Via national and international pre-sales (movie rights);
  • Using tax advantages. In the United States individual States may grant a tax relief if the film making takes place in that State, as the production provides a positive contribution to local economy;
  • By attracting private investors;
  • By means of temporary financing.

Bridge financing

When the film making process transitions to production a large amount of capital is required, typically provided by commercial entertainment lending institutions. However, getting this financing in place generally takes 10 to 20 weeks. In order to be able to hold on to locations and materials, and keep actors engaged during this period of time, a temporary short term form of financing is needed, the so called bridge loan.

Why the high return?

  • There are a lot of independant film producers in need of financing and
  • There are only 3 significant parties that,
  • Do not compete with each other because,
  • There is a high demand and limited supply.

Above all, specialist knowledge of this industry is required in order to properly determine the value and risks of a production.

Why is the risk lower?

Film financing is a normally high risk business. However, by financing only a part of the production and by applying a carefully designed set of risk reducing measures combined with specialist knowledge of film making and this market, it is possible to eliminate a great deal of the risk carrying elements.

Before engaging in a bridging loan a number of conditions must be satisfied:

  • The commitment from a senior lender for the final loan must be in place;
  • A closing attorney must be attached;
  • Adequate pre-sales have been achieved
  • A complete financing plan must be available;
  • All bridge funds are held in escrow and disbursed on a draw down schedule;
  • Actors and directors must be attached;
  • A production bond committed must be in place;
  • All films are underwritten by the Production Company which quantifies the estimated market value of the director, actor and screenplay combined. The value of this collateral determines the maximum value of the bridging loan. If despite everything else the senior lender walks away or the main capital can not be established, the value of the collateral is sufficient to pay back the investors.

Procedures for setting up and executing the bridge loan are strict and subject to law and regulations.

Other types of financing

Bridge financing when executed as describe above is a methode to provide short term lending with reduced risks. The size of the loan is typically limited to a few hundred thousands to a maximum a few million.

Other types of financing are the mezzanine and gap financing. These type of loans are significantly larger in size, medium to long term and often get rewarded with a share in the end result of the production. In other words, if a movies is a huge success or a huge failure, the returns on these loans is effected. This also means the investment risk is higher, since the results partly depend on the movies’ final success.

Senior lending is an investment strategy that involves far greater sums of capital and particpation in the entire film making process. MM Global Movies typically doesn’t engage in these types of lending.

Film CV - NO, NEVER !

In the Netherlands a few companies offer investment in the movie industry.

Most of them are using a structure called the 'Film CV', which is a legal company structure also known as a 'Commanditaire Vennootschap' in which investors are (silent) partners with only a financial contribution and no authority nor control over company management!

Risks are limited to the loss of contributed capital and the investor has a few fiscal pros and cons. 

The Film CV is similar to CV often used for ships and vessels.


The form of investment all focus on the end result of solely Dutch productions.

Only a handful are profitable, despite grant money. Projected profits are rarely achieved because of all the 'costs' charged by the financed parties.

The Film CV is fiscally regarded as a ‘one-time-trick’ and possibilities are already limited by the Dutch tax authorities.

The Authority Financial Markets (AFM) strongly advises against Film CV's !

MM GLOGAL MOVIES never ever uses a Film CV structure !!!