How does the JOBS Act and Film Financing affect your indie film project? The JOBS Act changed the landscape for independent film financing by creating new opportunities for certain companies to raise capital. Under updated SEC regulations, filmmakers and producers may be able to publicly advertise certain investment opportunities, but all offerings must comply with securities laws and investor requirements.
How does the JOBS Act and Film Financing affect independent film, television and music producers? Today, filmmakers have more options for reaching potential investors, including Regulation D private offerings, Regulation Crowdfunding and Regulation A offerings. However, raising money for a film is still a regulated process, and producers must carefully structure their offerings and follow SEC guidelines before accepting investment funds.
Parts of the JOBS Act that may specifically appeal to filmmakers looking to raise capital include:
Title II (Regulation D) – Allows certain private offerings to use general solicitation while limiting investment opportunities primarily to Accredited Investors.
Title III (Regulation Crowdfunding) – Allows eligible companies to raise capital from both accredited and non-accredited investors through SEC-registered crowdfunding platforms, subject to specific requirements.
Title IV (Regulation A+) – Allows companies to conduct qualified public offerings to both accredited and non-accredited investors under SEC regulations.
Title II allows producers to publicly promote certain investment opportunities through approved fundraising channels. However, there is a key restriction: securities offerings under Rule 506(c) of Regulation D generally require investors to be Accredited Investors. What is an Accredited Investor? Generally, a high net worth individual or qualifying entity that meets specific SEC requirements. Read more on Accredited Investors.
To raise funds, you WILL NEED to provide potential investors with some form of Business Plan and Financial Projections that explain important details such as the purpose of the offering, target offering amount, use of funds, ownership structure, capital structure and potential investor returns.
These types of fundraising activities still require compliance with SEC rules, including appropriate filings such as Form D where applicable. We recommend consulting a qualified securities attorney before accepting investment funds.
The final rules, often referred to as Regulation A+, are broken into two tiers of offerings that allow companies to raise capital from both accredited and non-accredited investors.
Both Tiers are subject to certain requirements:
Tier 1 offerings are subject to federal and state registration and qualification requirements. Issuers may take advantage of coordinated review programs developed by state securities regulators.
Tier 2 offerings are subject to additional disclosure requirements, including audited financial statements and ongoing reporting obligations. However, Tier 2 offerings provide federal preemption from state securities registration requirements for securities offered or sold to qualified purchasers.
Read the SEC’s Regulation A guidance and requirements
Effective May 16, 2016, Regulation Crowdfunding allowed eligible companies to offer and sell securities to the investing public through SEC-registered crowdfunding platforms.
Title III of the JOBS Act, commonly referred to as Regulation Crowdfunding, allows the general public the opportunity to invest in eligible businesses and projects. However, there are restrictions around how much an individual investor may invest during a 12-month period based on income and net worth. The SEC provides current requirements and investor guidelines on its website.
A filmmaker may not directly solicit crowdfunding investments from individuals. The offering must be conducted through an SEC-registered intermediary, such as a broker-dealer or funding portal.
Regulation Crowdfunding requires financial disclosures based on the amount of capital being raised. The requirements include:
An audit provides a higher level of scrutiny by an accountant than a review. Additionally, companies must disclose information about the company, its Business Plan, the offering, intended use of proceeds and other important details required by SEC regulations.
For filmmakers, Regulation Crowdfunding provides another potential path to raising capital, but it remains a regulated securities offering that requires careful planning, appropriate documentation and compliance with SEC requirements.
SEC Info: Investor Bulletin: Crowdfunding for Investors
The film and television industry is experiencing a significant transformation, driven by sustainable tax incentives that are reshaping investment landscapes and fostering economic growth. 📈💰
Enacted to combat the outsourcing of U.S. film productions, Section 181 allows investors to deduct 100% of qualified production costs up to $15 million (or $20 million in certain areas) in the year expenses are incurred. This immediate expensing contrasts with traditional methods that amortize costs over time, making investments more attractive.
🔗 Read more: https://www.law.cornell.edu/uscode/text/26/181
The Tax Cuts and Jobs Act expanded the benefits available for qualified film, television and live theatrical productions by allowing certain production costs to qualify for accelerated depreciation. This can provide additional tax advantages for investors and production companies.
More details: Tax Cuts and Jobs Act and Section 181
Film and television tax incentives can make productions more attractive to investors by reducing production costs and improving project economics. These incentives have also helped drive job creation and economic development in regions seeking to attract entertainment production.
Learn more: Film and TV Tax Incentives
New investment platforms and financing companies are exploring ways to connect investors with film and television projects. By combining structured investment opportunities with available tax incentives, these platforms aim to make entertainment financing more accessible to qualified investors.
Learn more: Film and TV Investment Platforms
👍 Read More: JOBS Act and Film Financing
🎥 Watch: FilmHedge CEO Unpacks Tax Advantages Gained From Section 181
▶️ Watch the Video
Are you prepared to use Title IV or will you be ready to take advantage of Title III of JOBS Act? Make sure you are ready – FilmProposals.com can help now! Whether you download our business plan template or work with us on a plan, you can not only be ready, but put your project in the best position possible today to facilitate success.
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