What does Loan-Out mean?
Loan-Out is a legal and financial structure in which an actor or other entertainment professional incorporates a personal service company — a loan-out company — that then contracts with producers and studios on the performer’s behalf. Rather than paying the performer directly, the production pays the loan-out corporation, which then pays the performer as an employee. Loan-out structures can provide tax advantages and liability protections, and are extremely common among established entertainment professionals. They require careful legal and accounting management and are typically established in consultation with an entertainment attorney and business manager.
Example:After her income from acting reached a significant level, the child actor’s family established a loan-out company on the advice of their entertainment attorney — a structure that the attorney explained could provide tax advantages while the performer was a minor, subject to specific legal requirements around the Coogan Law.
Example: The production’s business affairs department processed the actor’s deal through his loan-out corporation rather than paying him directly — a standard practice for established performers that the production accountant handled as a routine contractual arrangement.
Did you know?
Loan-out companies have been a feature of Hollywood deal-making since at least the 1950s, when tax rates for high-income individuals reached confiscatory levels and corporate structures offered meaningful tax advantages. Today the primary benefits are liability protection and flexibility in how income is structured and distributed. However, the Coogan Law creates specific requirements around loan-out structures for minor performers — ensuring that the corporate wrapper does not circumvent the legal requirement to deposit a percentage of the minor’s earnings in trust.
You can also find “Loan-Out” and related terms in this category: Contracts and Agreements.
