It is very important to recognize the bank's role in the deal. In many respects the role is simple, although accommodating a bank into the financing structure can be complex. The reason lies with the bank's chosen position as provider of senior debt finance. In simple terms, this means that the bank is prepared to lend strictly on the basis that it expects to be fully repaid, without facing any unreasonable risk and, in doing so, to receive a small return on its cost of capital.
This approach influences the bank's attitude towards distribution agreements, its reliance upon the completion guarantee, its attitude towards co-financiers and its cautious approach to calculating its interest reserve. Practically, this also often results in the bank being the last to put in its funding and the first to be repaid.
Getting the bank to the stage where it is prepared to lend can be somewhat tortuous, but I hope that this chapter will provide some clues to help the process along.
Was this article helpful?
If you have ever wanted the secrets to making your own film, here it is: Indy Film Insider Tips And Basics To Film Making. Have you ever wanted to make your own film? Is there a story you want to tell? You might even think that this is impossible. Studios make films, not the little guy. This is probably what you tell yourself. Do you watch films with more than a casual eye? You probably want to know how they were able to get perfect lighting in your favorite scene, or how to write a professional screenplay.