Debt Management

Closing credits for filmmakers: Cards rarely fund films


Credit is the lifeblood of America’s independent film industry, but stringent loan regulations curtailed access to credit and threaten the industry.

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Once upon a time in Hollywood, you could make a hit movie with a credit card.

Take, for example, Jeffrey Blitz, the director of “Spellbound,” a documentary that charts the progress of eight children in an all-American spelling championship. Blitz put the entire cost of the production on 14 maxed-out credit cards — a strategy that resulted in “Spellbound” earning an Academy Award nomination in 2003 and grossing nearly $6 million domestically.

Esther B. Robinson financed her first feature film, 2007’s “A Walk Into the Sea: Danny Williams and the Warhol Factory,” using a combination of private equity, public grants and credit cards.

“There’s a wide range of what a first-time film can cost, but credit plays an essential part in making it happen,” says Esther B. Robinson, an independent filmmaker and founder of ArtHome, a nonprofit organization that helps artists build assets and equity through financial literacy and homeownership.

“I kept $12,000 worth of credit card debt straight through the production of my film,” recalls Robinson. “I would just wait until a credit card company sent me an offer for a card with a no balance transfer fee, and I would just move my balance over — I did that for seven years.”

Credit crunch … coming to a theater near you

Alas, there are few such happy endings today.

While credit is the lifeblood of America’s independent film industry, stringent loan regulations and curtailed access to credit threaten to greatly impact the industry and prevent low-budget films such as “Spellbound” from ever seeing the light of day. Long gone are the days when a first-time filmmaker could choose from an assortment of credit cards to pony up the money for equipment and post-production expenses. Rather, with available consumer credit contracting by for a record eight consecutive month, according to a July 8 Federal Reserve report, more filmmakers are struggling to subsidize their projects. In fact, nearly 60 percent of U.S. banks reduced credit limits for new or existing credit card customers in the first quarter of 2009, according to a Federal Reserve survey of senior loan officers released in May.

“It would be impossible today for a filmmaker to have 14 credit cards of his own because credit card companies have battened down the hatches,” says Louise Levison, president of Business Strategies, a financial consulting firm for filmmakers and the author of “Filmmakers & Financing: Business Plans for Independents.”

Michelle Byrd agrees. Byrd is the executive director of the Independent Feature Project (IFP), a nonprofit organization of independent filmmakers. “A few years ago, it was much easier to get a credit card and increase your limit,” she says. “But filmmakers aren’t able to run up $2,000 to $3,000 a credit card anymore.”

What’s worse, not only is it harder for struggling filmmakers to access credit, but banks are now far less forgiving of those who occasionally miss making payments — an oversight that can have a disastrous impact on an artist’s credit score — and lifelong career prospects.

“If you fumble your credit football midfield, you’re really in trouble in the future,” warns Robinson. “Filmmaking isn’t a film-by-film exercise. It’s about making a lifetime of work … and so the way filmmakers have done business in the past is now being looked at very differently by banks.”

The result, filmmakers fear, is an economic climate that doesn’t exactly lend itself to the creation of films such as “Spellbound” — low-budget masterpieces that were essentially financed by the largesse of credit card companies.

“Would the world be a much sadder place without a delightful film like “Spellbound”? Absolutely,” laments Robinson.

A lesson in finance for filmmakers

Nevertheless, there is an upside to the current economic downturn. For starters, Robinson says that the credit card industry’s belt-tightening is prompting many filmmakers to take a more creative approach to raising capital. Co-productions, angel investors, bartering, Web-based fundraising tools such as IndieGogo — they are all innovative strategies enabling first-time filmmakers to subsidize their shoestring productions.

Another perk: today’s credit crunch promises to spare filmmakers the pain and anguish of insurmountable credit card debt. Just ask David Spaltro, director of the low-budget film “… Around: Embrace the Fall.” Spaltro self-financed his first feature film with 40 of his own credit cards. Since shooting “…Around” in September of 2007, Spaltro says he has been able to pay down three-quarters of the $150,000 credit card debt he accumulated during the film’s production, but not without a lot of blood, sweat and futons.

“The downside is that you end up living out of a bag and spending every waking hour juggling bills,” says Spaltro. “There were some months when it got so bad that minimum payments were $3,000 a month — you really can’t afford to live anywhere and you’re staying on couches. It’s been a ridiculous two years of an uphill battle.”

To avoid a financial fate such as Spaltro’s, many filmmakers are doing things they’ve never done before, such as checking their personal credit scores, paying off balances regularly and using 0 percent cards. In other words, curtailed credit might just be turning today’s artists into fiscially responsible agents.

“Filmmakers are still using credit cards, but they’re being a little bit more responsible about understanding ways to maximize their accounts,” says Byrd.

The future of film

But while a crash course in fiscal responsibility may be useful to some, Spaltro says that today’s lending restrictions are preventing struggling filmmakers from pursuing a livelihood in the arts. Even Spaltro admits that if he had “waited another six months” to begin securing credit, “I wouldn’t have been able to make my film.”

All of which has left financially savvy artists such as Robinson somewhat conflicted about credit — and uncertain of the independent film industry’s future. Ponders Robinson: “Do I want filmmakers to have access to a level of liquidity that allows them to make their films? Absolutely. Are credit cards at this moment the best or safest vehicle for that liquidity? No. But is it an important vehicle of last resort?”

Robinson pauses, and then offers a resounding, “Yes.”

See related:  Fed: Credit card lending standards tighten again, Credit card spending shrinks for eighth straight month, Tinsel meets plastic: The top 10 Hollywood credit card movies

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