January 4, 2024

How to Secure Gap Financing for Your Project

Shaudi Bianca Vahdat
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Financing a film can be an intimidating process. Between tax incentives, equity loans, and all types of debt financing, you have options. Here, we’re diving into a type of debt financing called gap financing with help from those who’ve done it. 

Wrapbook recently collaborated with The Independent Film & Television Alliance (IFTA) to help answer what gap financing is and how to go about securing it. They assembled a panel of experts to help understand this option and identify the best financing options for different situations. 

Let’s check it out.

Watch the virtual event below

This video is part of a larger series on film finance presented by Wrapbook & IFTA. The panel consists of experts in film financing from producers, to attorneys, a CEO of an investment fund, and even our very own VP of sales at Wrapbook. 

The panelists offer detailed, expert-level advice on a variety of financing-related topics in this video. Watch here:

The speakers include: 

This article is your “cliff notes”-style companion to highlight some key information. 

1. Understand your financing options 

So what is gap financing for film? Gap financing in film refers to funding that fills the gap between the total production budget of a film and the amount of money that has been secured from other sources. 

The terms “debt financing” and “gap financing” sometimes get used interchangeably. Gap financing is a type of debt financing. Gap financing refers specifically to the type of debt financing sought in the later stages of production to help cover unforeseen gaps. While we’ll be focusing on gap financing in this article, the advice is applicable to debt financing in general.  

With equity financing, on the other hand, a film’s production company will sell ownership shares of the film. Investors (entities or individuals) buy shares to help fund the movie. If the film makes money, investors typically receive a cut of the profits based on their shares. 

So, how does gap financing work? 

In general, gap financing only comes into play after other sources of funding have been secured. 

There are few investors who specialize in gap financing, as it can be risky. As a result, gap financiers may seek a higher return on their investment due to the increased risk associated with funding a project that is already in progress.

What is an example of gap financing in film? Let’s say you’re working on a film with a budget of $15 million. You were able to raise the full $15 million needed through a combination of pre-sales, private film investors, and your own personal investment.

Let’s say your film is set at a ski school, and you’re shooting mostly on-location outdoors. But five days into the shoot, a major snowstorm hits. Production has to shut down for two weeks as a result. You have to pay for an unexpected two additional weeks of accommodation and per diems for cast and crew. You also have to add additional rental days for all equipment. 

This adds up fast. With all of these unexpected costs, you’re not going to be able to finish this film with the original 15 million dollars you raised. You need an additional two million. 

Your team might approach a gap financier, like Michael Mendelsohn of our panel, to help fill that two million dollar gap. 

By contrast, an example of debt financing that isn’t necessarily gap financing can be found in the modern sci-fi classic Moon. For that production, the filmmakers realized they needed additional funding for special effects. This was after the budget and financing were complete but before production actually started. Independent film investor Trudie Styler could help fill out the special effects budget.

How does gap financing work in the context of other forms of funding? Many film projects will need gap financing in some capacity. However, our panel of experts don’t recommend relying on gap financing for the majority of your budget

In a typical financial plan, you’ll source most of your funding from other options, including pre-sales, private investments, and tax credits

Still, sometimes it’s unavoidable that you need a little extra money to get you all the way there. If you seek gap financing for film, you’ll typically need to work with a team of experts to get you ready to approach potential financiers. 

2. Find the right team 

Filmmaking is a team sport. Just as it’s crucial to hire the right artistic collaborators and crew, building the right business team is vital to getting your project financed and made. 

Even brilliant creative producers might need help when it comes to understanding the meticulous rules of tax incentive programs, accounting best practices, and the nuances of entertainment law.

Securing gap financing for a film is complicated, and our panel emphasized the importance of hiring qualified people to help you package your film to investors. 


Bring a lawyer in early to help you structure your finance plan. 

Avoid signing key agreements without professional legal counsel. You might think you’re doing the right thing by approaching potential lenders and financiers with all of your paperwork done. But if your documents are prepared improperly, you could delay or even lose funding. 

Consult a lawyer when signing documents like big talent agreements, tax credit approvals, sales agency agreements, and distribution agreements. These can all affect your financing if completed with even minor errors. 

Also, keep in mind that many financiers have deals in which the borrower pays for the financier’s legal fees. So trying to save money on legal fees short-term could cost you more in the long run. At the very least, it could cause delays for both you and your financier.


You’ll need a bulletproof financial plan to impress potential lenders. An experienced production accountant can help you develop one. 

If you’re looking at a tax incentive program for your film, a strong production accountant (and their team) is invaluable. Each incentive program is unique and can have complicated eligibility and compliance requirements. 

Regardless of how you structure your finance plan, our panel encourages investing in great accountants on the front end of the process. Trying to fix accounting mistakes retroactively takes longer and can result in serious delays in getting paid out. 

Invest in setting up your accounting correctly from the very beginning of the process. 

Even if unexpected problems arise, they’ll be easier and faster to work through with a strong foundation.

Production team

One factor lenders will consider when deciding whether to work with you is the strength of your production team. Know your strengths and gaps as a producer and put together a production team that complements them. They’ll be looking at your extended production team, including your line producer and production accountant

If you’ll be working in a state or country you’re not familiar with, our panel recommends working with a producer who either lives in the area or has extensive experience working there. Don’t plan on arriving and figuring it out on the ground. 

The team at Wrapbook is here as a resource, too. Our in-house incentives experts can talk to you about more general considerations for budgeting your project and gap financing your film.  

The bottom line is it’s okay not to know the ins and outs of financing as a producer. There are experts you can seek out and invest in for help. Be willing to be honest about what you don’t know and accept guidance from the pros. 

3. Nail your documentation 

Diligent, organized documentation is key to finding and securing funding. Below are some of the most important documents your potential investors will be looking at.  

Chain of title documents  

Whether you’re approaching an equity financier or a gap financier, chain of title documents are one of the first things they’ll look at. Potential lenders and investors want to know that you‌ have the rights to the project. Without that, there’s no reason to move forward with negotiating with you.

Make sure to get your lawyer involved with putting together your chain of title. They’ll help make sure you have the documents your financier will be looking for. They’ll also ensure these are in “financeable” form, or have provisions that make them amenable in case your financier requires that. 

Finance plan

Unsurprisingly, your finance plan is also very important to potential gap financiers. What are the elements of a great finance plan? 

First off, don’t make financial assumptions. Every line in your budget should be based on research and supported by proper documentation.

This includes research on buyers. Having a financial plan that includes pre-sales to demonstrate the validity of your sales estimates from a reputable company is great. But if you don’t have pre-sales, you should have a reputable international sales company onboard to give estimates. 

Potential lenders and financiers will be using your financial plan to determine how close your film is to being truly financed. They’re looking to see how realistic your plan is. They’ll look at both your equity and debt components. In general, it’s not a good idea to create a financial plan that relies on securing a large amount of gap funding. Typically, some amount of equity is needed. 

Part of determining whether to take your plan seriously or not depends on being able to name and document your other sources of income. So for example, not just listing “five million from investment firms” but “five million from X investment firm” with the confirmed documents to back it up. 

Your finance plan should show that with the exception of the amount you’re asking from the lender, you’re working with a fully realized budget. 

Team expertise

Your lender or financier will be looking at you and your team’s background and past projects. They’re looking to see that you have the credibility and experience to get the job done. What is gap financing worth if the team doesn’t have the skills to use it effectively? Not much, and most financiers don’t want to get involved with an incomplete or inexperienced team. 

If you’re taking advantage of a state tax credit program, they’ll want to see your plan for shooting in that state. This is an opportunity to demonstrate that you’ve done your homework on that particular state’s programs (more on that later in the article). You should be able to name the specific vendors in that state you plan to work with. 

4. Set yourself apart

Beyond packaging your film, your team, and your financial plan, what else can you do to be appealing to financiers? 

A common theme among panelists was that most financiers are short on time. There’s a real opportunity cost for them if they spend time on a project that doesn’t have legs. You want to respect their time by being as prepared as possible before approaching them.

How to Secure Gap Financing for Your Project - Wrapbook - Filming
What is gap financing? Potentially, it’s the key to getting your project made!

Take every opportunity to show that you’ve done your homework as a producer. As mentioned previously, bring in key team members – including production accountants, line producers, and legal – early. Rely on them to get the details right. 

Financiers also take notice when producers get back to them quickly on questions. This shows them you’re organized and have quick access to the information and documentation you need. 

You want to come across as reasonable, intelligent, and experienced. But you also want to be transparent. If there’s a weakness in your finance plan (even after you’ve looked at it with your accounting and legal teams), be upfront about it. 

Your potential investor might be able to help you come up with a solution. But if you fail to articulate any issues, they may resent having to root out the problem themselves. 

So what is an example of gap financing done right? A savvy producer pulling together a team of experts, having complete documentation, and demonstrating competence. 

5. Find the right state for your project 

Production incentive programs have already come up a few times in this article. A big part of gap financing for a film is financing against tax credit programs from states and local areas.

Our panelists emphasize that there is no one “best” state program for everyone. Rather, the best tax credit program for your project will be based on all the details that make your project unique. 

As early as possible in your project planning, work with your team to find the best state program for your project. Keep in mind that application approvals can take a long time. 

For example, New Jersey’s current approval time is approximately three to five months. You might not be able to secure a loan based on those tax credits before your application is‌ approved. If you don’t start early enough, you could be facing significant delays. 

When it comes to the actual application process, our panel strongly advises producers to seek help. There are over 30 active programs in the United States alone. Each has its own application process. Get help from your accounting team and incentive experts! Wrapbook’s Ryan Broussard can help answer any questions you or your team might have. 

Part of what your accounting team can help you consider? The requirements and stipulations for each tax credit program, and how they might affect your finance plan. 

For example, some states have job ratio requirements for how many in-state workers you’ll employ. If that number ends up being different from what you apply with, you could lose a portion of your tax credits. 

Some states take a long time to actually pay out (we’re talking years). Other states have diversity requirements. In a state like Illinois, for example, you could lose all of your tax credits if you’re not tracking diversity properly. 

Tax credit programs are also an area where investors may be paying more attention to the creative side. Why? Some of these programs will disqualify your film if it portrays their state or residents in what it considers a negative light (Texas, for example). 

Because of this, your financiers may be looking closely at whether your script and vision for the project will adhere to these requirements. 

Finally, don’t make assumptions! For example, producers sometimes assume that because a given state has a popular tax incentive program, crews will be easy to find and hire locally. This isn’t always the case. 

For example, Georgia has one of the most popular and buzzed-about tax incentive programs in the United States. As a result, crews tend to be busy and hard to book. 

That means to shoot in Georgia, you’re potentially going to need to bring in a lot of people. Those extra travel and per diem costs need to be captured in your budget

Here’s our panelists’ list of some of the best tax programs out there to start your search (by order of mention in the webinar). You can also find a full state-by-state breakdown of programs here.  

Remember: don’t pick a state because of perceived convenience (like because you happen to live there). Make sure it fits from both a production and financial perspective. 

Wrapping up

Thanks to our panelists for taking the time to fill us in on what is gap financing in film! 

Ready to get started on a polished, thoughtful budget financiers will take seriously? Check out our free film budget template. It includes line-by-line examples to help make sure you don’t miss anything. And once you’re ready to approach film investors, use our free film investor pitch deck template to nail your meetings and secure that funding!

Last Updated 
January 4, 2024


At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice.  You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.

About the author
Shaudi Bianca Vahdat

Shaudi is a Seattle-based musician, theatre artist, writer and social media marketing specialist. She holds degrees from Berklee College of Music and the University of Washington School of Drama.

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