How to Avoid Common Mistakes When Financing Your Film
From overestimating rebates to misunderstanding waterfall recoupment
Independent film financing is as much an art as it is a science. One wrong assumption—about rebates, tax credits, or how revenue flows back—can derail your production or sink your profit. That’s why smart producers lean on experience, not guesswork.
At FilmMoney and FM Lending LLC, we’ve reviewed hundreds of financing packages and seen the same mistakes trip up producers again and again. David Brown, a veteran PGA producer and founder of both companies, built these financing tools to help filmmakers stay on track—and out of trouble.
Here are some of the most common mistakes—and how to avoid them.
❌ Mistake #1: Overestimating Tax Credits or Rebates
Yes, tax credits are powerful—but they’re not guaranteed until after final audits and spend reports are reviewed. Many states also have caps, delays, and program shifts.
Solution:
Use conservative projections when estimating incentives. At FM Lending LLC, we typically advance 75–80% of the projected value—not 100%—to account for processing time and audit variance.
❌ Mistake #2: Misunderstanding the Waterfall
The waterfall determines who gets paid, when, and how much. If you don’t understand your position in the waterfall—especially when loans, investors, and deferred payments are involved—you may not see any backend profit.
Solution:
Work with your legal and financial team to map out the waterfall in plain English. Understand where lenders like FilmMoney sit (usually first position), and ensure you’re accounting for their recoupment in your projections.
❌ Mistake #3: Assuming Equity is Cheaper Than Debt
Giving up equity may feel safer than taking on a loan—but it often costs more in the long run. When you sell off too much of your backend, you lose control, leverage, and long-term profit.
Solution:
For short-term production needs, debt can be cleaner and cheaper—especially with a clear exit like tax credits or MGs. David Brown created FilmMoney for this very reason: to provide smart debt tools for producers who want to stay in control.
❌ Mistake #4: Failing to Account for Cash Flow Timing
Your budget may balance on paper, but if cash doesn’t arrive when you need it, production stalls. Crew, vendors, and locations don’t wait on delayed investor wires or tax offices.
Solution:
Use tools like bridge loans, incentive advances, and union deposit loans to manage timing gaps. FM Lending LLC offers short-term lending to match your real-world production needs—not just your spreadsheet.
✅ Final Takeaway
Film financing isn’t just about raising enough—it’s about structuring it right. Avoid these common mistakes by building your finance stack with clarity, caution, and partners who’ve been where you are.
If you’re ready to run your numbers by a team that gets it, reach out to David Brown at FilmMoney and FM Lending LLC for a free project review.