What is Private Debt and how does it work in film and tv?
Debt is a core component of film and TV financing. In fact, almost every movie or show you've ever seen likely used some form of debt financing. It's an essential tool for production companies, allowing them to access cash quickly and maintain control over their creative projects. Unlike a traditional bank loan that might be used for a house or car, private debt in the media industry is tailored to the unique assets of a production.
This can include using a guaranteed payment from a distributor (a pre-sale) as collateral, or a loan to get you by until a government tax credit is delivered. Private debt is also how productions often access funding for large-scale equipment development and acquisition. The key benefit? Private debt allows the artist or company to retain full ownership of their intellectual property (IP). This is crucial in today's landscape where streaming platforms and AI technologies make content rights more valuable than ever. When structured correctly, private debt ensures that once the loan is repaid, the creative team keeps all future profits and control, unlike private equity which requires giving up a portion of ownership forever.
Why Choose Private Debt with Catchlight Capital?
At Catchlight Capital, we understand the incredible amount of effort that goes into creating content and developing art. As an Ontario-based lending partner, our mission is to assist your goals by providing a strategic and flexible financing approach that puts you first. We see finance differently; it's not just about the figures on a spreadsheet, but about the story behind them. We believe in getting to know our clients and their creative visions on a deeper level.
This philosophy allows us to quickly and meaningfully engage with the arts and media community, participating in a wide range of debt financing initiatives that help bring remarkable stories to life. We continuously strive to make an effort in strengthening our community ties to freelance artists, producers, and companies of all sizes, with a core mission to support, effect change, and produce authentic content for the greater good.
Need Financing?
Find out what Catchlight offers below!
Bridge and Development Loans
The main purpose of this loan is to "bridge the gap" between a project's upfront financial needs and the eventual funding from long-term sources, which are often delayed. This allows a production to move forward without waiting for promised funds from tax credits, pre-sales, or other major financing to be released.
What is it?
Purpose
A bridge or development loan is a specialized form of short-term financing for film and TV productions. It is designed to cover immediate, critical expenses during the early stages of a project, such as script development, securing key talent, or preparing for principal photography.
These loans are typically secured by the legal right to receive a project's future cash flows. For example, the collateral might be the value of a secured tax credit or a signed pre-sale agreement with a distributor. The loan is then repaid quickly and in full once the larger, long-term financing is finalized and the funds are disbursed.
Collateral / Recoupment Strategy
Pre Sale / Minimum Guarantee Loan
A Pre-Sale or Minimum Guarantee loan is a financing option that allows you to borrow against a signed distribution agreement. It is a commitment from a distributor to purchase the rights to your finished film or TV show in a specific territory, guaranteeing a minimum payment upon delivery.
What is it?
Purpose
The main purpose of this loan is to access cash for production before your project is completed. By leveraging a "bankable" pre-sale contract, you can secure the necessary funds to move forward with your production, using a distributor's promise of payment to cover your upfront costs.
The collateral for this type of loan is the legal right to receive the Minimum Guarantee payment from the distributor. The loan is then repaid directly and automatically from the funds that the distributor pays into a special account upon the delivery and acceptance of the final film.
Collateral / Recoupment Strategy
Asset-Backed Loans (ABLs)
An Asset-Backed Loan is a flexible financing solution that uses a production company's measurable assets as security for a loan. These assets can include a variety of items on the company's balance sheet, providing a way to unlock capital that isn't tied to a specific film's performance.
What is it?
The main purpose of an ABL is to provide working capital and liquidity for the company itself, rather than a single project. This type of loan can be used to fund a film slate, manage a company's day-to-day operations, or cover expenses that fall outside of a specific film's budget. It's a way to leverage your company's value to ensure a steady cash flow.
Purpose
Collateral / Recoupment Strategy
The collateral for an ABL can be a wide range of assets, including accounts receivable (money owed to the company), intellectual property, or even a portfolio of future revenues. The loan is typically repaid from the company's general revenue stream, and its value is continuously assessed based on the quality and liquidity of the pledged assets.
Specialty
Situation Loans
What is it?
A Specialty Situation Loan is a custom financing solution designed to address unique or complex challenges in the film and media industries. These loans are not tied to a typical financing structure like a tax credit or a pre-sale agreement, making them highly flexible and tailored to a specific project or company's needs.
Purpose
The collateral and repayment strategy for a Specialty Situation Loan are determined on a case-by-case basis. Collateral can be a mix of assets, from intellectual property rights to future revenue streams from a specific deal. The repayment plan is structured to align with the unique cash flow of the underlying asset or transaction, ensuring a solution that works for everyone involved.
Collateral / Recoupment Strategy
The purpose of this type of loan is to solve an uncommon problem and provide capital when traditional lending options won't work. This could include financing the acquisition of a media library, structuring a loan around a complex multi-party deal, or providing a bridge for a company to restructure its finances.
Contact us.
Info@CatchlightCapital.ca
Business: +1 (905) 928 - 6253
Waterloo, Ontario