June 10, 2017 at 12:18AM

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Gear Financing

Been grinding for a little bit and now I'm at a crossroad. I get offered a job but don't have the equipment requested. Many times I don't have enough time to get to a local rental house/ they don't have what I need/rental fee is too high for me to make any money from the gig.

I want to upgrade and I don't want to have to save up for something more than what I have. I'll leave specific equipment out of this because I don't want this post to devolve into gear raging, just know I want to be able to put together a nice kit. To do this I need financing. Around $20-25k.

Anyone know a good financial institution? Companies who work specifically for filmmakers/videographers? A google search gets some results, but I have no idea how legit they are. Anyone actually had financing for film gear? Who with?

13 Comments

If you are doing this professionally, and are incorporated, you could get a small business loan from a bank if you have decent enough credit. Make sure it's going to be worth it. If it won't pay for itself in three years, you are taking on too much.

June 12, 2017 at 12:20AM

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Joshua Bowen
Editor
525

How does leasing work in the US? Over here it's the most attractive way of acquiring gear over fx 3 years due to tax laws. If I were to buy gear for around 20k I couldn't deduct it all immediately... I'd have to write it off yearly with a fixed percentage.

But if I lease the gear, I could deduct the leasing cost monthly and at the same time have a relatively cheap all-risk insurance while it's being leased.
Then finish off by buying out the gear for a 5% of the gear value.

So maybe check out leasing companies...

Biggeste downside is that it can be a bit expensive way of doing it, due to intrests, but the being able to deduct it monthly outweighs that for me.

June 12, 2017 at 9:40AM, Edited June 12, 9:40AM

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Torben Greve
Cinematographer
478

Might depend where you're located - I leased my camera through a rental house in a lease-to-own scenario, still have a year left to pay it off but so far it's been worth it. 2 year lease total.
I have an LLC which helps with things like this.

June 12, 2017 at 5:57PM

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Ben Meredith
Cinematographer/Filmmaker
1054

You are going to want to get an accountant with ties in the industry.
Leasing or financing gear makes more sense than an outright purchase in the world of cheap credit. I have financed quite a bit of personal gear as well as buying outright.

Before I go on, there was something troubling in what you said. If you can't afford to rent the gear you need and profit, you are unlikely to be able to afford the gear you are looking at. Like I said get an accountant with ties to the industry for guidance.

so purchase vs finance vs lease

Purchase:
When you are flush with cash and will be for the foreseeable future a purchase is great.
You outlay the money first and get to chose your depreciation schedule. Basically you get to write off the loss of value year over year for the gear on your takes. So if you buy a 50k camera and depreciate it over 5 years, you get to write off 10k a year from your taxes over 5 years.

Finance is like a purchase where you pick the depreciation rate except you won't have to front the cash up front. So if you think you will make $50k in 5 years off your kit, you can depreciate it over 5 years so you get a balance of money in vs money out. This makes your kit tax neutral. You can also get some 'wiggle room' by depreciating it slightly faster or slower so that you basically pay for your kit over time tax free.

The big idea about the top two is that you pick the depreciation time for your gear to something that is reasonable for the industry. ie-3-5 years this helps smooth out your taxes while you build equity in your camera gear.

Leasing is a separate beast.
Your lease payment is a business deductible expense, with no separate deduction for camera depreciation(no double dipping ) So if you take a out a year 12k lease on a camera each $1000 payment is deductible fully in the year, slicking 12k off your yearly income.

However this leaves you with the situation where the payments and deductions may be MUCH more than you are making or can reasonable expect to make off the gear in a lease term. So if you expect a 4 year roi on a camera, you are taking a big deduction the first year, but then will have to pay taxes on the camera income over the next 3 years.

Now finance, vs purchase vs lease.

I started out straight purchasing my gear and for the most part I regret doing this. It makes business cash flow a breeze, but depletes your savings. Depleted savings means less agility, you spend next years money today. Also important it doesn't improve credit. I have some gear I expected to do gang buster business that just wasn't right for most jobs. ( PS don't put the wrong gear on a job because you own it. )
This was a good idea on stuff like an a7sII, audio gear, and other smallish stuff.

Leasing got me my start on going bigger and is a great help. I started leasing a while ago and created a business to do it. The commercial credit I could get as a new business was worthless. I own lots of Canon gear because of their generous leasing terms. ( c300mkII and a set of CinePrimes). there are few options in terms of leasing ( 12 or 24) month finance. This is good and bad. The good is that each job the gear goes out on effective reduces its price. Pay $300 a month, make $250 and you paid $50 for a high end piece of gear. That feels AWESOME. Even if you gear doesn't fully cover the payments, you are getting the gear you want at a discount. So a full kit with cine lenses mostly paid for it's self each month.
Awesome right?
All expect when that $1500 a month payment comes due and you have had 0 work. That is scary and it's hard to remember the good times when the bad times roll in.

Financing
This is my end game. I am only in the beginning of the financing game and it seems to be the best of all worlds.

It took me 3 years to build enough of a business credit history with leasing to get viable commercial credit. Right now interest rates are very low. With good credit you get rates that make long term finance make sense. I have gotten some gear with an expected long ROI but I was able to deliberately select a payment term so that each month I am slightly positive cash wise. So I have a new piece of gear at 650$ a month that is bringing in $675. Realistically it can continue to do that for 5 years, including all interest and extra expenses.

The bonus with this is you pick your own term, shop for your own financing and rate and pick your manufacturer. So you can buy what you want exactly and not just what is being offered monthly at the time. (Get a Sony Body, Cooke lenses and a Preson FIZ without figuring out 3 different programs) you still get the scary months of low income, make wise choices.

But 1st you need an accountant to help you be realistic with what the downsides are. You also need to be in a position to rent your gear to a production. Buying 50k of gear and making it a freebie on existing jobs is a great way to loose a pile of money.

So basically
1) start a company to begin building a corporate history.
2) find an industry centered accountant
3) lease what you can get a hold of and can use
4) after 3 years start financing gear on better terms with commercial credit

e) Don't let your appetite get beyond your business. Just because you can finance a new Sony full frame camera with a set of Cooke i7's doesn't mean you should.

June 12, 2017 at 6:43PM, Edited June 12, 6:54PM

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Joseph Slomka
Color Scientist - Acquisition through archival
337

oh and for the short answers:
For leasing I have used Canon, though I also hear good things about Zeiss and Sony.
For Finance:
Bank of the West Commercial Banking

Typically whomever you buy from will have a favored financial institution that they point you towards to close the deal. They are motivated to make a sale.

I have purchased 'big' gear from VTP, ZGC and Abel. They have all done right by me on my transactions.

Joseph Slomka

June 13, 2017 at 6:04PM

Another idea you might consider if you are going to lease... or in any case that is...

Rent your own gear to yourself during shoots.

You don't have follow rental house prices, but it will help you write off the lease.
Fx. at one point I had more video gear than I needed to fulfil my job at my day to day employer. So I took the 3% of the gear value, deducted 30% of that and then rented my own gear for our jobs.... total win win situation for everyone, I got my gear paid, my boss was able to pay less for rented gear and sometimes the clients would get a lower bill than they otherwise would.

So rent to yourself, just as if you would have rented the gear at a rental house.

June 14, 2017 at 5:42AM

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Torben Greve
Cinematographer
478

There's some really great stuff in this thread.

One thing I've been burned on- be very careful when choosing things like camera bodies to lease or finance, which these days (depending on your market) might be essentially worthless (or at least not a selling point for you on jobs) within 2 years. The OP said he didn't have time to go to a rental house, etc. Depending on your market, maybe you can instead partner up with someone on Sharegrid who owns what these jobs ask for. But also, I've found that most gigs that require a specific camera and which do not give any notice prior to filming aren't the kind of jobs where they'll pay for you and the camera- they're mostly bottom-feeder gigs from clueless producers.

That said, it is helpful to have a decent-quality 4Kish camera body that's versatile enough to shoot your own projects and do, say, 75% of the jobs for your clients.

The best investment I've ever made as far as equipment is in lenses and things like a Steadicam, gimbal, lighting control gear, etc. These things have paid for themselves many, many times over.

The worst investment for me was a camera body that cost me about $30K over 4 years, which I ended up selling early at a loss. Payments are over in October, yay :-(. Yet, selling early was the right call.

And yes, for us I did go back and finance another camera body. But one that makes sense for us- as others have said, financing makes a lot of sense sometimes.

June 14, 2017 at 10:06AM

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Patrick Ortman
I tell stories. Sometimes for money. Sometimes, not.
610

Agree... camera bodies are the most insecure to invest in because they depreciate so fast in this day and age. If you buy now, what is available to people in 36 months when the lease is over most likely will be so much better that you have to dump the price if you want to sell that body. It sucks :(

But I blame the industry itself... I really don't understand this race. We are at a point now where we potentially could rest without remorse if the bloody tv set production companies and camera production companies would just stop the fuck making more and more pixels etc. The image looks fine... they should stop fixing things that work.

Torben Greve

June 15, 2017 at 12:23PM

So I have a question for you...
How did you sell your camera body?
I am clueless on how to best sell large gear.

What worked for you and what didn't?

Joseph Slomka

June 16, 2017 at 12:48PM

Torben,
Seems to me for the most part you shouldn't expect to sell the camera for much when you are done. The point is to use it to add value to a production and that is where is makes it money back. It will lose 75% of it's purchase cost but it should pay for it's self in direct rental or in indirect value generated on your work.

That said anyone who dropped the serious coin on an Alexa at literally any point in the last 10 years should be doing well. The camera is basically the same and produces top quality images with no fuss.

Though I'm sure if I get one they will announce a 4k+ native version

Joseph Slomka

June 16, 2017 at 12:54PM

@Joseph: for me in this case the answer to selling my "not a bright investment" camera was reduser.net. Oops, I may have said too much...

Patrick Ortman

June 18, 2017 at 2:23PM

Just my opinion as with every other comment to your post. Seems like a very common recipe for failure to load yourself up with debt when you don't have the business. You could alternatively use what you have and rent what you don't have and as your business grows and as important as your skills grow can afford to buy with cash what you need. If your business income cannot pay for what you want right now, likely that is a recipe for failure and is so so common. Instead of going into business, grow into business and if the market slows down etc, then you can weather the storm because you don't have a pile of debt. You will find when you are in debt you will take jobs that otherwise you would avoided and end up as a result of being screwed, in more debt or being sued by demanding customers. I know not what you want to hear, but hope you don't learn the hard way.

June 15, 2017 at 6:36PM, Edited June 15, 6:38PM

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Another thing is that most of us have huge piles of equipment we are never going to use, when you have little money, you make very careful purchases, when you have a pile of money, you end up with piles of equipment that you don't use.

June 15, 2017 at 6:39PM

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