GadCapital: Filmmakers May Get Small Business Loans

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Even though the film business expanded by 1% between 2015 and 2020, this growth rate is deceptive. Fewer people went to the cinemas and cheaper streaming and renting options. This has only escalated during the COVID-19 worldwide pandemic, as studios have chosen direct-to-home releases over theatrical releases. This disruptive trend might forever affect how audiences perceive new films.

Filmmaking has changed with significant health and safety requirements, making set navigation more challenging. At the same time, production proceeds amid the epidemic, actors and crew members are subjected to stringent testing and modified processes that might be shut down at any time. These adjustments are anticipated to last for the foreseeable future.

Small business loans for filmmakers might assist you in repairing the revenue gap if any of the developments mentioned above have impacted your bottom line. Learn about your low-cost financing alternatives in the sections below.

Existing Filmmakers’ Financing Options During the Coronavirus Pandemic COVID-19,

In March 2020, after COVID-19 caused widespread shutdowns throughout the United States, Congress approved the CARES Act, which featured the new Paycheck Protection Program (PPP). Due to the current economic crisis, this Small Business Administration (SBA) loan program offers extra cash for filmmakers and other small enterprises in need of stability. Business owners may also use PPP funding to grow their businesses.

After the first round of PPP applications ended on August 8, 2020, Congress enacted the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Act”), which opened the second round of PPP applications December 27, 2020. Beyond the initial round’s emphasis on payroll expenditures, this second round of PPP loans allows for new loan uses.

Apply for your first or second PPP loan.

The simplified Gadcapital.com Loan application can assist you in swiftly filling out your application, uploading relevant papers, and submitting it to the bank.

GadCapital can assist you in obtaining these funds. Since 2013, we’ve specialized in SBA loans, and our bank network has helped finance almost $4 billion in SBA, PPP, and bank term loans.

GadCapital can assist you with your first or second PPP loan. Businesses with less than 500 workers that the epidemic has harmed are eligible to apply for their first PPP loan.

On May 31, 2021, the program will come to an end. After that date, no applications will be accepted. If Congress approves an extension, keep a watch on the GadCapital Small Business Blog for more details.

Filmmakers’ funding issues and chances

Some of the financial difficulties you may encounter as a filmmaker aren’t unique to the business. Since a result of the COVID-19 pandemic’s income loss, more small company owners may find it difficult to secure finance, as lenders often reject applications from borrowers in troubled industries. Additionally, lenders may be hesitant to accept small company owners who are new to the industry or have little expertise, including those in the film industry.

On the other hand, some lenders may find it advantageous to approve filmmakers for small business loans. Streaming service consumption in the United States climbed 10% from March to July 2020, when the COVID-19 epidemic initially escalated, compared to the same time in 2019. As a result, filmmakers who intend to put their work on streaming platforms may find it simpler to earn money, pushing lenders to accept them. Consider looking into the following forms of finance to see if you could be eligible for small business loans for filmmakers.

Filmmakers’ funding choices

Filmmakers might look to the SBA or non-government sources for small business finance. Each small business loan for filmmakers has its rates and terms, but the following recommendations may give you an idea of what to anticipate.

The Small Business Administration’s 7(a) lending program

For filmmakers, many, if not all, small business finance experts suggest low-cost SBA 7(a) loans above all other forms of small company loans. Because SBA 7(a) loans feature modest monthly payments, low-interest rates, and lengthy durations, they are ideal for filmmakers. SBA 7(a) loans may be used to:

  • Obtaining Working Capital is a must. Working capital is likely the most vital sign of the health of your film business. Working capital may be calculated by subtracting current obligations from current assets or assessing how much cash your firm has on hand. Negative working capital signals a need to expand your help, and you may utilize your SBA 7(a) loan to accomplish so by purchasing new equipment or hiring new employees.
  • Consolidate Your Debts – You may refinance all of your existing small company loans using SBA 7(a) debt consolidation loans. This includes merchant cash advances, daily or weekly payment loans, high-interest business loans, and short-term company loans.
  • Acquire Commercial Real Estate — You may utilize your SBA 7(a) loan funds to purchase owner-occupied commercial real estate if you want to build a second studio or office space for your film business. You may also use your SBA 7(a) loan to refinance your present commercial real estate mortgages.

Filmmakers may benefit from SBA 7(a) financing.

According to leading experts, SBA 7(a) loans are widely regarded as the “gold standard” for small company financing. The following are some of the reasons why SBA 7(a) loans are so popular:

  • Affordable monthly payments
  • Terms of ten years (25 years for commercial real estate loans)
  • There are no prepayment penalties.
  • Low-interest rates
  • Funds are used extensively.
  • All 50 states are covered.

Filmmakers must meet specific criteria to qualify for SBA 7(a) loans.

To apply for SBA 7(a) loans, you and your film business must fulfill all of the following requirements:

  • You must be a citizen or a legal permanent resident of the United States.
  • Your film production firm must be headquartered in the United States.
  • You must be at least 21 years old to participate.
  • Your film firm must have been in operation for at least two years.
  • You must not have had any bankruptcies or foreclosures in the last three years.
  • You must have a credit score of at least 650.
  • There must be no recent settlements, tax liens, or charge-offs owed to your film firm.
  • All government-related loan repayments must be made on time by you and your firm.

Some lenders may have additional restrictions that others do not. GadCapital Loans, for example, does not demand prospective borrowers to provide business plans, as do some other loan providers.

How to apply for a 7(a) loan from the Small Business Administration for filmmakers

Step 1: Confirm that you and your film business meet the criteria as mentioned above for applying for SBA 7(a) loans.

Use our simple online tool to see how your company’s financials match up for financing. GadCapital AdvisorTM allows you to keep track of your company’s financial health and discover how banks assess businesses. GadCapital Advisor also makes recommendations to assist you in improving your credit and to increase your business’s financial health as required.

Step 2: Gather all necessary papers and consider enlisting the help of a bookkeeper, accountant, or another financial professional.

Step 3: Decide on a lender based on the following factors:

Availability

All lenders should be accessible, including those with self-explanatory loan conditions. Consider searching for loans elsewhere if your lender does not assign you a representative who is accessible by phone or email. Your representative should also be well-versed in your application, the film business, and the production firm.

Reviews

Look for your lender on TrustPilot, Google, and Consumer Affairs to discover customer reviews. These evaluations will help you determine whether your lender is a good fit for your film business. Check whether the assessments are from genuine borrowers. See if you can recognize any other filmmakers in the crowd that could be comparable to yours.

Fees

Interest and payback costs will almost certainly be included in your loan, but excessive extra expenses might be a red sign. Consider switching lenders if you see a lot of hidden expenses. You should also double-check that all of your loan costs are payable before your loan is funded and during the term of your loan.

Transparency

Look for the APRs and interest rates indicated in your loan conditions. If these amounts aren’t appropriately expressed, your lender may be hesitant to disclose your loan conditions completely, perhaps obscuring clauses prohibiting a loan from fulfilling your demands.

Clearly stated loan terms.

Your loan should contain small language that is simple to grasp and state yearly interest rates and APRs. Don’t be afraid to question prospective lenders about collateral requirements, payment amounts and prepayment penalties, frequency, and total loan amounts since small language might disguise unfavorable loan prices and payment schedules. If your lender provides you imprecise or unhelpful answers, you should consider switching lenders.

The Small Business Administration’s 504 lending program

Small firms may get low-cost modernization or expansion finance via the SBA 504 loan program. Proceeds from an SBA 504 loan might be used to upgrade equipment, establish additional sites for your film firm, or hire more personnel.

If your film firm satisfies the public policy aims of your local community development organization, SBA 504 loans may be highly beneficial (CDC). Your SBA 504 loan and CDC may be able to pay up to 90% of your modernization or expansion expenditures in this situation (at most 50 percent from your SBA 504 loan and at most 40 percent from your CDC). The balance of the project is your sole immediate out-of-pocket expense.

The Small Business Administration’s microloan program

If your organization meets the SBA’s criteria of a tiny business (also known as a microbusiness), you may be eligible for the SBA Microloan Program. Microloans are small loans of up to $50,000 that may be used to meet any company expense, excluding commercial real estate acquisitions and debt payments.

Other finance alternatives include non-SBA loans.

When it comes to small business loans for filmmakers, SBA loans are frequently the best option, but there are other possibilities. Larger payments, higher rates, and shorter durations are often associated with these alternatives. These are some of the options:

Term loans from a bank

If you don’t qualify for SBA loans, bank term loans provide the same fast financing as SBA loans to be a good option for you. Both loan forms allow for working capital acquisitions or debt refinancing, but they have different rates, prepayment penalties, loan amounts, and payback lengths. Inquire with your lender about these terms in detail.

Lines of credit for businesses

You may acquire a loan with a maximum amount proportional to your credit score through corporate credit lines, although it’s usually smaller than average bank term loan amounts. Another distinction between business lines of credit and bank term loans is that the latter does not need you to employ all of your available cash. It’s usually a good idea not to utilize all of your money on a company line of credit since you only pay interest on your money.

You may use your company line of credit as much or as little as you desire until the funds are depleted. This isn’t the only advantage of using a business line of credit for your film company; they also don’t have the same collateral restrictions as other loans.

Business credit lines are similar to business credit cards, but they are not the same. Although both financing sources provide revolving credit, only business credit cards may be used again once you’ve used them up and paid off your loans. Furthermore, unlike business credit cards, business lines of credit do not provide spending benefits.

Cash advances from merchants

If your film business accepts credit or debit card payments, you may be able to get capital via a merchant cash advance (MCA). A card provider lends you money via MCAs, which you return by putting aside a tiny part of all card transactions and paying it to the provider in installments. Payment options based on installments are also available.

MCAs’ convenience might mask the difficulties of extraordinarily high APRs.

Why should you go with GadCapital Loans?

Do you need money to help you restore your business? Don’t spend time filling out several applications at different banks. GadCapital can assist you in locating the appropriate financing for your specific requirements, whether it’s an SBA loan, a Bank Term loan, or another kind of loan. We refer around 90% of qualifying applicants to banks, and our financial specialists are available to answer any queries.

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