There are many kinds of movies, from Independent to Studio, but they all have one requirement in common. Money. It costs money to make a movie. A film’s budget can range from a few thousand dollars (or in our case $1,100 on My Date with Drew) to many millions, but whatever it is, the financing has to come from somewhere. So how do you find it?
A financier is a person or company which will provide development, production, and/or distribution money for a film. The following are the primary types of funding that exist in the film industry.
Bank loans - These usually require that a distributor is already attached and committed
Gap Financing - This is the last piece of financing that comes into play when you have the rest of your financing in place. The bank always want their money back first, and it's expensive to secure gap financing in that the interest will be high so you find as much of your money elsewhere before "gapping" the final piece.
Studio financing – This occurs when a major film studio (i.e. Paramount, Warner Brothers, etc) funds the film with their own money - this money may be from many different partners or even partnered with another studio (this has become more common to downsize the risk on big budget movies). Most big budget Hollywood blockbusters are funded this way.
Private investors – When someone has a personal interest in a subject matter or perhaps would just like to get involved in the film industry and sees the possibility of a profit, they will often times invest their own personal money into a film. Independent films often rely on private investors for financing. You often hear of dentists and doctors pooling their money to fund a lower budget film and experience the rollercoaster of filmmaking from this introductory level.
Co-productions - Co-productions is a general term meaning more than one production company has invested but it could also include a distributor and or a different country altogether. When Canada and Australia form a Co-production certain tax incentives are allowed that make the production costs more manageable. (America is excluded from allying itself with certain countries such as England and Canada and Australia.
European co-Productions - Co-productions can be very complicated deals where tax incentives from various countries are used in conjunction with investors and financing. Lawyers specializing in taxes are hired, and usually at least one from each country in the Co-pro have to get involved in this form of financing. It's not for the light hearted and it takes many skilled minds to bring in bigger budgets using this form of financing.
Private donations, grants - This type of funding is a little more difficult to get and is often not nearly enough to finish a film, but its usually a good start if it fits the criteria a certain organization is looking for. If you are a non-profit entity/organization, it is more likely that companies will donate to your cause.
State tax incentives - Certain cities and states, such as New Orleans, Mississippi, New Mexico, have tax incentives to lure filmmakers into the area. The local governments there give back some of the money you put into the state. For example, a state might offer the production company 15% back for every dollar that they spend in state (in jobs, locations, equipments, production office space, etc). It bring revenue into the area because the production is spending potentially millions of dollars into local businesses and giving jobs to its citizens, and the production company has an incentive to shoot there because they are getting good deal too!