As a producer, director or owner of a project for Canadian film, televison or the increasing popular area of digital animation you already know the score. Costs are up and the ability to finance your projects to full completion is as challenging as ever. Financing your film tax credit incentives under the 5 or 6 different tax credits that are available may be the solution to your problem!
We continually meet with clients who are in the same conundrum, which is namely that they are in search of that final ‘ gap ‘ that will fully complete their financing. Equity investments have been committed, some sort of debt has been arranged for a part of the project, and pre sales and distribution is being finalized. Maybe, just maybe creative financing of the tax credits available to you in Canada (these are non repayable grants of very generous dollars) will be your final piece of the puzzle.
We don’t necessarily believe that film tax credit incentives could claim they are the total solution to the entertainment industries problems, but at a time when we are just seeming to come out of the global 2008 implosion that hit every industry including yours the reality is that the Canadian tax credits are the freshest breath of air in probably the entire industry. (Many U.S. and international tax credit schemes for film are under attack).
Jeff Steele, a U.S. pundit and expert on film and film financing recently said that part of the problem is that production owners use the tax credit and the financing thereof for the cash flow to start the next project, while the current one is not yet completed – we’ll leave that one for you to decide re right and wrong way to do things. We do agree with him though that the planets align in a very challenging way when you consider the global credit crunch, the only minor participation of banks in the industry, as well as the general perception of people that many players enter the financing of productions based solely around the perceived’ sexiness’ of the industry . Anyway…!
Not considering a film tax credit incentive financing is clearly not helping the cash flowing of your project. Tax credits in all ten Canadian provinces can be financed on a ‘ when completed’ basis, although more and more entrepreneurs, particularly independent producers utilize accrual financing ‘, which creates a ‘cash flow as you go ‘ scenario, providing instant working capital to your project.
The proper financing of your production , utilizing a tax credit finance strategy should no doubt enhance your overall R O E, namely return on equity – and we can assure you those equity and mezzanine investors will feel a lot better knowing that film tax incentive finance props up your project just nicely .
Speak to a trusted, credible and experienced advisor in film tax credit finance and get on the cash flow bandwagon, which we believe is where you want to be!