The Export-Import Bank of the United States, a government agency that supports the export of American goods, has reached an agreement with the American Film Marketing Assn. to provide film production loan guarantees to independent producers and qualified lenders.
The program, which charges a flat guarantee fee of just 1% split with the lender for the life of the loan, is designed to increase the number of films produced and to offer financial enticement that could stanch the flow of independent production to Canada and other incentive-heavy territories.
While move reps the first time that such a program has been made available to the independent film industry, it’s not the first time that the federal bank has dipped its toes in the indie world.
Nine years ago, Ex-Im launched a program in which foreign sales agents could offer their buyers a year’s worth of government-backed credit on purchased titles. The strategy was designed to drive up the number of titles picked up by overseas buyers.
Three years later, J&M Entertainment became the first sales and production company to secure film financing from Ex-Im when the bank agreed to underwrite around 75% of J&M’s investment in the 1994 film “What’s Eating Gilbert Grape.” One player, however, remembered that deal as “really difficult” — so difficult, in fact, that “Grape” remains the only film financed through Ex-Im.
That’s likely to change very soon. Jackie M. Clegg, vice chair and chief operating officer of Ex-Im, acknowledged previous Ex-Im packages as “a lousy product” that was “very cumbersome” to navigate. However, she assured the crowd of AFMA members and press assembled at the Beverly Hills Hotel Wednesday morning that, when the new Ex-Im program launches in May, indies will find that it’s “tailored for the film industry.”
Although the initial plan is scaled for films with budgets of $1 million-$15 million, it currently places no caps on loan amounts and the guaranty can cover up to 90% of the loan. The program’s projected minimum for its first year of operation is $100 million.
Plan is targeted for films produced by independent producers and financed by loans secured primarily by contracts with independent foreign distributors. At least 50% of production costs must be of U.S. origin, although payment of foreign nationals will be treated as U.S. content if it is subject to U.S. taxes.
Andrew Stevens, president and chief operating officer of Franchise Pictures, stood on the dais to praise the new plan next to Clegg, Lew Horwitz, president of the Lewis Horwitz Organization, Sen. Barbara Boxer (D-California) and AFMA chairman/Kathy Morgan Intl. president Kathy Morgan.
Offstage, however, Stevens said that the real indie production problems stem from union struggles and that Ex-Im incentives would have done little to dissuade his company from producing its last eight films in Canada, including current pic “The Whole Nine Yards” as well as the upcoming “Battlefield Earth” and “The Art of War.”
“Basically, for those who have to suck it up and shoot in the U.S., Ex-Im is great,” said Stevens. “But at least it’s a step in the right direction.”
The Ex-Im program is very similar to what’s currently available for U.S. manufacturers who produce goods for export. Filmed entertainment is the second-largest export industry in the U.S., exceeded only by aerospace. Ex-Im’s longtime involvement in the aerospace sector has earned it the nickname “Boeing’s bank.”