NewEnglandFilm.com

"People get into business because they love doing it, they’re passionate about the act of filmmaking… but they don’t have the business background and I think if you’re not putting equal attention on becoming business savvy you’re crippling your opportunity to succeed in what you really love." (Kate Arno; the Director of Training and Communication at the Maine Small Business Development Center)

Kate Arno knows that a strong business sense is an important part of the film industry. She began her video and film production company in the1980s with the assistance of a Small Business Administration loan. Since then she has held the position of Vice President of Television at Maine Public Broadcasting Network and today serves as the Director of Training and Communication at the Maine Small Business Development Center (SBDC). Recently Arno led a panel of representatives from several Maine organizations that help small businesses get funding. The meeting, "Financing for Film and Video Production Business Ventures," held on November 18, 2004, was organized by the Maine Film and Video Association.

The Maine Film and Video Association offers workshops, seminars, social functions, and networking opportunities for Maine’s filmmaking, video and new media professionals. Recent workshops, led by Maine’s seasoned production people, have addressed issues such as international filmmaking expeditions, property rights, and film archiving.

At the November session, three panelists, along with Ms. Arno, explored several sources of funding for a project including a traditional bank loan, government-backed loans, micro-enterprise loans from community development organizations, venture capital, and angel investors. Rob Small of the Finance Authority of Maine, (FAME), Helen Brimigion of the Maine District Office of U.S. Small Business Administration (SBA) and Al Moroney of Coastal Enterprises Inc (CEI) all shared their financial expertise. They also talked about investment incentives that are designed to attract new funds to specific industries.

Arno pointed out that a business may be launched with personal savings and some productions may qualify for grant and foundation funding, but she does not recommend depending on them for a long-term financial plan. Grants can provide a track record and viability for a small production company but there are too few of them to rely on for the long term. The Maine SBDC assists businesses in, among other things, strategizing about funding options, including connecting them to the groups represented at the meeting.

The SBA offers services like loan guarantees for high risk businesses, providing a greater margin of comfort for banks that would not otherwise make a loan available. The SBA, like Maine SBDC, also provides guidance for prospective loan applicants to prepare business plans that investors are likely to accept. The panelists emphasized that a strong business plan is crucial to acquiring a loan. Investors want to see a description of the business, ownership and legal structure, skills and experience, a marketing plan as well as a business and financing plan.

CEI is a community development corporation that started in 1977, and like the SBA and Maine SBDC, serves the entire state of Maine. Working with a strong sense of social responsibility, CEI provides financial and business counseling to a wide cross-section of clients from Tom’s of Maine, Mad Gab’s (known for the lip lube), and the Portland restaurant Ezo African to low income people, people with disabilities, and women starting a business in Maine. CEI’s loan programs can fill in the financial gap between a company’s equity and the collateral or matching funds that a bank may require for a more conventional loan.

As with the two other organizations represented, CEI requires a strong business plan. A company needs to identify how many units of a product per day and per year it projects that it will produce. It is also crucial to demonstrate that the management team has the skills to handle the scope of the production.

FAME offers what is called "Capital Access Programs." Different funding plans are catered towards different stages of business growth. FAME also oversees the Maine Seed Capital Tax Program, which offers incentives to fund certain fledgling businesses by offering a 40% tax credit for the investor and 60% tax credit for investors who finance businesses opening in areas with significant of unemployment

Panelists also discussed angel investors, another source of funding for small businesses. Angel investors are usually individuals but sometimes a consortium of investors who provide funds and own some percentage of the venture. FAME’s Rob Small pointed out that it is very important to have a business plan, including strong financial statements, when working with angel investors because they are looking for a return on their investment, a profit.

"[Angel investors] always walk in the door backwards because they are always looking for the exit… they’re not going to invest in your ability to make this project, they’re going to invest in your business sense and your ability to make them money," Small said. "You need to have a strong business plan. That is the number one thing you can do to get a loan or to get an investment from anyone."

One opportunity to propose a project to angel investors is the MIX or Maine Investment Exchange, a quarterly forum organized by Maine & Company. It offers a forum where companies can pitch their work to a room full of angel investors. The investors can then decide whether or not they are interested in investing in the projects. The MIX audience often includes attorneys, consultants, accounting firms, bankers, and individuals who have funds to invest.

Arno says, "Many incentives programs related to investment and loan opportunities in Maine are worth exploring… people who administer these kinds of programs are often very passionate about what they do. They really view their jobs as to connecting viable enterprises with that money."

Arno also says it is important to make personal connections. "While going to a bank sometimes may seem very daunting it really pays to get yourself ‘shopped around,’ so to speak," she explains, adding "You should get yourself better informed by visiting and really making personal connections with the different sources of money, because you never know when that fit is going to be just right and where you can talk to people who really want to give you the money if you qualify for it — and if you’ve got something viable."

For some filmmakers, the panel provided eye-opening information about available funding opportunities and strategies for accessing them. Most of the same opportunities available to small businesses in any industry are also available to film, video and new media professionals. To access them, however, producers must invest significant effort into developing their business savvy. The November panel provided the inspiration and direction for many to take that "next step," whether it be a start-up or growth opportunity. If the panelists are an indication, Maine has especially unique opportunities because, in its intimate community of people, many are enthusiastic about supporting small business.