As mentioned, film subsidies tend to be more common outside the United States. In theory, a subsidy fund’s main goal is to promote creativity in the arts. While we think of these as being public funds, a lot of European media funds now try to recover costs whenever possible. However, the big difference between a subsidy fund and an equity holder or traditional lender is that there are little to no penalties for not repaying the money. So the media subsidy funds might want you to pay them back, and you might feel bad about not doing so…but there’s literally not a heavy price to pay if you fail to do so. However, as the money is more or less in the public sphere, governing boards for subsidies might have other rules attached. This might mean shooting in their country and hiring locals, which could end up costing more than the value of the subsidy itself. And as political cranks seize more and more power around the world, they are demanding the funds become more like investment money. In these cases, it might take some mighty fine lawyering to convince the subsidy fund that it’s not a true lender.
There’s money you have to pay back, and then there’s money you should maybe pay back if you can. Unsecured funding agreements can look like loans or temporary discounts. However, in most cases, productions don’t repay the loans, and never pay the full price.
So let’s say you have an actor or cinematographer you really love, but can’t afford. Well, if said individual has enough good will towards your project, you could offer a deferred rate. In this scenario, your project pays what it can for the time being, then finds the money somewhere else. In reality, maybe one in twenty of these agreements ever work out.
Goods & Services
So what else can’t you really afford in your budget? Goods and services agreements can be used to offer a reduced rate in exchange for a credit on the project and/or a financial stake in any profits. For example, the post-production facilities you need to edit the final cut might be out of your range; if the owners and operators are willing to go for this deal, then that solves the problem. It’s pretty similar to a deferral agreement, but with a more concrete repayment plan.