Frequently Asked Questions
What is a Private Money Loan?
A private money loan is a loan secured against an asset (e.g., real estate) with the source of funds coming from a private investor as opposed to an institutional lender. Private money is a faster and easier way to obtain financing compared to traditional lenders. Private money loans require much less documentation and have a much faster application process. Private money loans can be approved and funded within 7-10 days, while traditional lenders can take 45 days or longer.
What Are Private Money Lenders Interests Rates?
Private money lender interest rates are higher than interest rates available from long-term conventional lenders. Private lender interest rates are higher as the loans are for short-term use (1-3 years) and may be considered higher risk. Private money lending rates will fluctuate based on the loan to value, the type of loan being requested, and the overall perceived risk involved.
What is a State Film Tax Credit and Tax Credit Loan?
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For states looking for economic development, many have long offered tax incentive programs to filmmakers to produce feature films and television programs in-state.
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To qualify, the production must meet certain budgetary (qualified expenses) and talent requirements (using local talent and vendors).
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Credits are paid to filmmakers once the state can confirm that production has been completed and requirements have been met. This verification process can take months to complete.
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How can HD First Capital Help?
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Filmmakers include Tax Credits in their budgets but cannot wait months to receive the funds.
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Hogan Douglas can lend them money before production starts, during production, or after production has been completed.
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Hogan Douglas can assist by lending the amount of the Tax Credit and obtaining the rights to the tax credit as collateral through assignment.
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When does Hogan Douglas receive the credit payment?
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Once the film production has concluded and the state has verified all the necessary requirements, it will pay the funds directly to Hogan Douglas because it has been assigned the Tax Credit.
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What is a Minimum Guarantee and MG Loan?
A Minimum Guarantee is a flat fee that the distributor (e.g., Netflix) agrees to pay a filmmaker for the right to distribute (e.g., domestically, North America, Europe, Asia, etc.) the completed film, whether the film is successful or not. The distributor determines the MG offer based upon 1000s of past comparable film sales.
At the loan closing, Hogan Douglas is assigned this pledge. Then, we monitor the filmmaker’s progress to ensure that they finish the film correctly and on time to meet the distributor's specifications and receive repayment of their loan.