What does Gap Financing mean?
Gap Financing refers to the practice of securing additional funding to cover the “gap” between a film’s budget and the amount of money already raised. This financing is typically obtained from a lender and is repaid using future revenue from distribution deals, presales, or other income streams. Gap financing is often used in independent film productions, where the initial budget may not fully cover all production and post-production costs. For example, an indie filmmaker might secure gap financing based on future international distribution deals to complete the film’s budget.
Example:The production company used gap financing to secure the final $500,000 needed to complete the film’s budget.
Example: After securing distribution deals for several territories, the filmmaker was able to obtain gap financing to cover post-production costs.
Did You Know?
Gap financing is often repaid from future earnings, making it a crucial tool for independent filmmakers trying to finish their projects!
