Offering Additional incentives to financial investors

State film credits and grand-father scripts of section 181 of the Internal Revenue Code can offer investors a added incentive to invest.  If you are not familiar with Internal Revenue Code section 181, as a film maker shame on you. Federal job act allows for a production tax incentives. Section 181 allows for a 100 % tax deduction for motion pictures and TV series, oppose to film amortization over a 15 year period.

Section 181

An investor will be able to make an investment with your project for a great ROI without giving up the 100% immediate deduction in the current year committed. Here are some of the guidelines to follow to become eligible for this deduction. http://www.thewrap.com/movies/blog-post/grandfather-your-section-181-benefit-today-32265

“75% of the motion picture must be shot in the US to qualify for Section 181.
- There is a 15 to 20 million dollar budget cap.
- There is no minimum film production budget cost.
- TV pilots, TV episodes (up to 44), short films, music videos and feature films all qualify for Section 181.
- Section 181 can be applied to active income or passive income.
- Investors can be either individuals or businesses.
- Section 181 is retroactive.
- There is no expectation for film distribution or film completion. 
- The motion picture’s corporation issues Schedule K-1’s to the investors so they can take advantage of Section 181”.

For an investor the qualify deduction allows tax rebates and incentives, additional federal and state incentives, may have NOL to carry-back two years or carry-forward for twenty. If investors are set with this years tax incentives, make sure you take advantage of the grandfather rule in section 181 benefits.  Every dollar counts, so think like an investor.

State Tax Credit

Most states like, Louisiana offer tax credits up to 30% of the production budget and additional city or parish credit that may be used to offset tax liabilities. There are standard applications to apply for these credit and they are disbursed first come first served.

http://louisianaentertainment.gov/index.php/film/news/

Louisiana guidelines and clear and straight to the point. Production must be held in the state of Louisiana, a minimum of $300k and above and below the line cost are included. If your not happy with that, after an CPA audit has taken place, the production company may request the state of La. To purchase the film credit for 85% of the certified value. How is that for incentives!

What are the correct steps to finance your indie film?

With the current US finance market and economy in turmoil and sputtering on the road to success. Now is the time to convince alternative financial sources to think out side the box on what is the next boom to invest in.

There are hundred of private investment firms that are commissioned to select wise investment to grow funds and create high level yields and strong return on investment. Can your indie film be that investment?

What types of financing opportunities are available?

Two alternative funding sources I would like to recommend are, AKAMAI Capital,

Website (for more information): http://akamaicapital.com/ and New Market Growth, Website (for more information): http://www.newmarketsvp.com/.

Each of these funds offers financial options from equity; loans, hybrid financing and gap loans for specialize funding, such as film.

• Companies unable to qualify due to stringent underwriting from traditional loans
• The funds target capital needs from season companies
• Companies that will assist socioeconomically distressed area’s

Your financing should include Print and Advertising to let the investor know that you are thinking about repaying the investment.

Sounds exciting, next you need to know how to qualify?

Before turning in your financial package for consideration, the company should take the following example as the investment criteria:

• Management Team
• Business model
• Competitive Advantage
• Market Solution
• Current Sales & Marketing
• Project Sales & Marketing
• Exit Strategy

The above criteria should be address in your company business plan.

 Other helpful information

What ever your company lacks on paper or experience, each of these financial partners can help you build a strong and reliability business that can grow the company assets and profits. Each provide a season management team with a wealth of general and specialized business to meet your needs.

Each company will support management from beginning to the very end of the venture.