Gap Financing

Gap financing is a loan against the estimated value of a film's unsold rights. When pre-sales, incentives, and equity don't quite reach the budget, a lender advances the difference — the "gap" — secured by sales estimates for the territories still open, prepared by the sales agent and haircut hard by the lender.

Because it's secured by projections rather than contracts, gap is the expensive money in the stack: higher interest, fees, and a strict cap (lenders rarely gap beyond 10–20% of budget, against conservative estimates — usually a fraction of the sales agent's "ask" numbers). It sits in the recoupment waterfall ahead of equity, which is why equity investors scrutinize how much gap a plan carries.

A typical indie financing stack, bottom to top: equity, tax incentives, banked pre-sales, then gap bridging the remainder — with a completion bond wrapped around production so lenders know a film will actually be delivered. Every layer has its own paper, timing, and cost; closing them simultaneously is why independent film financing takes as long as it does.

Understanding this stack is part of financing literacy — the education our Financing Readiness Desk exists to provide before a writer or producer walks into a money conversation.