Finance Model Pros and Cons

Finance Model Pros and Cons 

Bank Loan

Pros

The interest of a bank loan is tax-deductible so the company can claim money back from the government. They also use very low fixed interest rates meaning the money you pay back is very close to the amount you borrowed. The money you borrowed does not have limited things you can spend it on. 

Cons

There is lots of paperwork involved, a long wait time and you need a strong credit score to be credible. You all so need to offer some collateral just in case you can't pay. You have to pay the money back. The financier benefits interest. There is a risk that the financier won't lend you the funds 

Crowd Funding

Pros

You can market your idea and film at the same time as raising money, using word of mouth you get money to fund your film and an audience to watch it. You don't have to deal with companies or studios changing your idea to suit them. 

Cons

The campaign is not always a success and you may not get your target goal, there is lots of competition within crowdfunding websites and it is hard to get your idea heard. you don't have to pay any money back. The financier takes a small cut of every donation. 

Grant Funding 

Pros

You don't have to pay them back, the money could come from big organisations, media companies or institutional and governmental settings. The grantors may help with some processes of the film making.

Cons

The company's that agree to give the grant may want to change certain parts of the film and they have control. They are very complicated to apply for and they usually only come about every year so if you miss one you will have to make. 

Private investment

Pros

You don't have to pay the money back as it is an investment, not a loan. You don't need a good credit history to get an investor. Many investors have lots of experience with running company's so you could learn from their expertise. 

Cons

You may lose some control over the project because the stakeholders may insist on being part of the decision making process. The investors want to make money so they have very high expectations. There is a risk that both the financier and the filmmaker will lose money. 

Self-funding

Pros

You have absolute control of every aspect of the film as you are paying for it. If the film is successful you may receive profit 

Cons

You have to still pay tax and earn a living. It is a large outgoing and the money flow will be poor as it will take a long time for the investment to finish. If the project runs into problems, you will have to pay for the mess. 

Local authority or Public investment

Pros

You can get a large amount of money that may be eligible to be tax-free. The money is from lots of small-time investors so they will not usually be granted creative input for the film, giving you more freedom than one or more investors. 

Cons

The investors may want stuff in return for investing, this will have to be supplied to keep them on board and to keep your funding. You may not be eligible for this option. The investments are very competitive so there is no guarantee that your project will get lots of investors. 

I believe that crowdfunding is the best option for our company because we are a small business and the money will come from the people in the local area which we are filming, it also advertises the film using word of mouth. We also don't have to pay any money back increasing profits. 

I have listed the pros and cons of each method of product funding in order to find out what is best for the company using simple condensed descriptions to compare the different pros and cons. Will help get the most budget possible for the project.