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TOPIC: Funding

Funding 11 Jan 2007 21:15 #14196

  • juise15
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What happens when a bank tells you that you have no collateral.

I am trying to fund reopening of a 2nd run theater that I have a clever business plan for but the bank sees me as having nothing to back it. What can I do?

Are there any grants available? Would the SBA be approachable on this?
Justin Toney
Creative Multimedia

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Re: Funding 12 Jan 2007 21:44 #14197

  • Large
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Banks don't like movie theatres.

Alternative sources of funding:

Friends & Family
Equipment leases for Seats, Concession Equipment and Projection Equipment
Investors

Almost every small cinema operator I know has used most if not all of these.

Banks will lend you operating capital after you have demonstrated an income stream. That means you are open and making money.
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Re: Funding 12 Jan 2007 23:52 #14198

  • slapintheface
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SBA will help but it can take 4 to 6 months .
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Re: Funding 13 Jan 2007 07:39 #14199

  • Dexxa
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Look up business finance via google, I found a few on there that i will be using to fund my latest cinema project.
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Re: Funding 13 Jan 2007 13:55 #14200

  • juise15
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Well the building has all the concession equipment and seats installed already. It has projectors and some sound (but the sound is dated).

What constitutes labeling a building as historical? Scenario: Building was built in the early 70's and is the last remaining of the original theaters in the city.
Justin Toney
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Re: Funding 13 Jan 2007 17:56 #14201

  • Mike
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what state?

Michael Hurley
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Michael Hurley
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Re: Funding 14 Jan 2007 17:59 #14202

  • juise15
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Louisiana
Justin Toney
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Re: Funding 14 Jan 2007 18:29 #14203

  • Mike
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Some states: fund. Others: do not. Are you in a Katrina area? Seems like there'd be money for that. Sounds to me like you need a partner with some $.

Michael Hurley
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Michael Hurley
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Re: Funding 15 Jan 2007 08:59 #14204

  • dsschoenborn
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Is Owner/Seller financing an option for you? That might be your best bet until you have an income stream.
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Re: Funding 15 Jan 2007 11:20 #14205

  • Barry Floyd
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In the SBA 504 loan program, the borrower is only required to provide 15%-20% cash equity injection for the loan program.

My wife and I used the 504 loan program to build our theatre, and it has worked well for us.

How did we did the 15-20%?? We bit the bullet, sold our house to get the equity out of it, and never looked back.
Barry Floyd
Floyd Entertainment Group
Lebanon, Tennessee

Stardust Drive-In Theatre
Watertown, Tennessee
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Re: Funding 16 Jan 2007 01:47 #14206

  • juise15
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Being a 1st time theater owner means that I don't have much to back me on this. I live in the city where Hurricane Rita hit (directly), but I was told the only money was available if I occupied during that time (and they have already given all the money that feel is necessary).

Repairs aren't that big an issue because either I get everything wholesale, or I am doing most of the work without hiring anyone. Thats the advantage of having carpentry skills!

Owner financing is not an option as the owner is kind of a crook. The only things that are in my favor are:

1) All the numbers suggest a positive growth of the theater
2) Surveys that I have conducted show people will go to a budget movie because they dont want to pay 8 bucks!
3) Surveys also show that the community wants this place back (but want to see it cleaned up a lot).
4) I have a church who has already signed up to rent a room once a week for at least a year (they have also agreed to pay a premium price to guarantee their spot and to help me out).
5) We are a college town, the theater is a block from the college.
6) I setup a myspace just to see what would happened and it is taking off like a rocket.
Justin Toney
Creative Multimedia

"Inspiration is only a thought away"
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Re: Funding 16 Jan 2007 03:14 #14207

  • Cinemateer
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Personally, I would not recommend borrowing from friends and family. I know that many businesses are started this way, but just as many cause rifts between the family member or friend down the road, which is not worth any sum of money. Unless it's a straight-up gift with no payback expected, get a contract written up and treat it as a formal business transaction, not a family favor with a hand-shake. Everyone involved needs to know what should happen when you're late with a payment, for example.

The SBA 504 program sounds like a great option. However, you can now get a home equity loan from your existing house at low interest rates without having to sell it like Barry mentioned. I got one for $55k for another unrelated business and it worked out great and was extremely easy to get from our bank. They don't care what type of business you're starting this way. Just make sure the value of your home/property is actually increasing instead of decreasing! Also realize that you are using your own money. It's always smarter to use OPM (Other People's Money) whenever possible.

[This message has been edited by Cinemateer (edited January 16, 2007).]

[This message has been edited by Cinemateer (edited January 16, 2007).]
"In a place like this, the magic is all around you. The trick is to see it." -Martin Landau
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Re: Funding 16 Jan 2007 14:31 #14208

  • juise15
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Problem: I don't own a home
Justin Toney
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Re: Funding 16 Jan 2007 16:43 #14209

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That's not a problem, it simply removes one option. There are many more out there and I'm sure you'll find one or more. Your local angel investors is something else to consider, although they usually choose to invest in techie or medical companies. You never know though- there may be a passionate moviegoer out there too!
"In a place like this, the magic is all around you. The trick is to see it." -Martin Landau
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Re: Funding 16 Jan 2007 22:30 #14210

  • juise15
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I know people who are loan officers, I think I will use that to my advantage.
Justin Toney
Creative Multimedia

"Inspiration is only a thought away"
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