Financing Scarlet (Or anything RED for that matter)

[Eric J Kosinski]

I spent $30,000 in the RED store in a matter of 24 hours, and I still need some things.

I know how that goes; I'm up to $16,000 without any lenses or real battery power, minimal SSD cards, etc. Basically I'm at an enough to shoot stage. I'm happy as hell about it, and can't wait to get my Scarlet X. I'll spend much more for accessories the day it arrives.

 

[Jon Jones]

THen take the money that you've made with the Canon 5DMII and use that for the SCARLET in 6 or 10 months. If your planning on being that much of a go getter, you should be able to get that much business in that time frame.
And because you don't have an interest payment, then it only takes you 6 or 10 months to pay off the camera instead of 2-5 years.

 

[Jon Jones]

Yeah, as soon as the camera arrives, I will be able to shoot with it. I ordered 2 RED BRICKS and the CRADLE, so that it all fits on the CLUTCH. But I still need a Mattebox, EVF, Filters, Tripod, Lighting, Steadicam. The next buying spree will be another $30,000.

I know how that goes; I'm up to $16,000 without any lenses or real battery power, minimal SSD cards, etc. Basically I'm at an enough to shoot stage. I'm happy as hell about it, and can't wait to get my Scarlet X. I'll spend much more for accessories the day it arrives.

 

[Eric J Kosinski]

Yeah, as soon as the camera arrives, I will be able to shoot with it. I ordered 2 RED BRICKS and the CRADLE, so that it all fits on the CLUTCH. But I still need a Mattebox, EVF, Filters, Tripod, Lighting, Steadicam. The next buying spree will be another $30,000.

I've been drooling over "THE CLUTCH" for like 6 months. How is that beast of a rig?

 

[Jon Jones]

It is awesome, and so compact too! It comes all put together, folded up. It folds up into the size of a briefcase, and it feels super steady. I cannot wait to actually use it for real, instead of just walking around with it on my shoulder, with my wife and kids looking at me all crazy, lol It seems like the perfect shoulder rig, with 1/4-20 holes on the rear to plant the battery pack. Check out the pics...

I've been drooling over "THE CLUTCH" for like 6 months. How is that beast of a rig?

 

[Eric J Kosinski]

It is awesome, and so compact too! It comes all put together, folded up. It folds up into the size of a briefcase, and it feels super steady. I cannot wait to actually use it for real, instead of just walking around with it on my shoulder, with my wife and kids looking at me all crazy, lol It seems like the perfect shoulder rig, with 1/4-20 holes on the rear to plant the battery pack. Check out the pics...

Holy shit that thing is freakin' sweet !!

 

[Jon Jones]

Yeah man, I have used cheapo shoulder rigs, and here's the thing, I am getting too old to have a crappy unbalanced rig on my shoulder, cause I tell ya, it hurts. The CLUTCH has a really nice padded shoulder rest.

 

[Steve Sherrick]

10 things to consider

1. Do you have existing clients and are they the types of clients that will recognize the jump in quality from your previous cameras?
2. Do you have a business plan?
3. Have you done market research? How many production companies in your area? How many other owner/operators in your area?
4. How long before you need to turn a profit?
5. How many revenue streams can the camera generate (See #2). Answering this thoroughly with strong data to back it up is what will get your bank's attention.
6. If you are going for a bank loan - do NOT approach them with a business plan that solely revolves around making movies. It's dead in the water before you have the chance to explain. (See # 5)
7. You need cash to get cash. Bank will want to see some of your own money being invested. Percentages will vary, but be prepared for the bank to require this.
8. If going the loan route, avoid conservative banks. You'll be shut out. Banks who have cash, and able to take some risk will be better choices.
9. If you can save up and pay for your gear in cash, you'll avoid interest and see faster ROI.
10. Treat this like a business from day one. Do lots of research about various business structures (DBA, LLC, Inc.) Find the right fit for your business. Make sure you have legit insurance. Make sure you have contracts and other legal documents in place. Maybe take a business class.

If the camera's job is to make money, it takes clients to make that happen. Having a Scarlet will not make this happen, but it certainly could be a valuable tool if you have a client base that demands it. Many of those you see here who do well with their cameras had strong client rosters and leveraged that. It really is the name of the game.

 

[Carlos Reyes]

I would go with Eric J and buy maybe a 5DMII, or a 7D even, with some canon lenses. Your looking at way less than half the investment when it comes to the peripheral gear. I spent $30,000 in the RED store in a matter of 24 hours, and I still need some things. The 5DMII's keep their value really well too. A lot of people are using them, and will continue in the future.

I already have a Canon and its great for what it is but its so limited, and still today a lot of the people I have worked with look at the camera and say, "your filming with that?" in a negative tone, and thats another annoying factor. I live in Miami and I've met a fair amount of people that do video work around here, potential clients, you mention RED and their eyes light up. Having a scarlet would have landed me a few projects, funded short films, because that would take their production to a new level, meanwhile I gain more experience. I've gotten so many mixed responses though its tough to make a decision, I think I might be patient, wait it out for a few months, january price hike is a bummer if I take that approach...

 

[Jon Jones]

Well, all I can say is that I would never finance a camera. I'm not saying your the devil if you do either, lol. If your going to do it, make sure you have enough character to go out there and get those jobs to pay for it, and get enough jobs to pay it off a lot sooner. I would never condone borrowing to get something though. I say if you can't afford it, then there's a reason why, and if your not making enough with your current rig to buy the camera, then there's also another reason you can't afford it. Not being rude, just trying to get you to maybe take some of the blinders off man.

 

[Carlos Reyes]

Well, all I can say is that I would never finance a camera. I'm not saying your the devil if you do either, lol. If your going to do it, make sure you have enough character to go out there and get those jobs to pay for it, and get enough jobs to pay it off a lot sooner. I would never condone borrowing to get something though. I say if you can't afford it, then there's a reason why, and if your not making enough with your current rig to buy the camera, then there's also another reason you can't afford it. Not being rude, just trying to get you to maybe take some of the blinders off man.

Haha no worries I know exactly where your coming from, and your right I'm not really making much money off video right now. But the problem is that I could be, but between my day job and full course load at school I can only shoot so much. I have gotten so many clients that are on hold waiting for when I have time, So VERY soon im leaving my day job to dedicate to shooting, because I'm at the point where I can start actually making some money hopefully.

 

[Nicholas Fitch]

Thought I'd offer some expertise in the area. In addition to owning a small production company, I act as Director of Finance (Entertainment Division) for an equipment leasing & financing company located in Southern California, WB FINANCIAL: https://www.financialwb.com/equipment-leasing/red-digital-cinema-cameras/ . We have special financing programs in place to accommodate purchases by rental houses and production companies as well as freelancing professionals. Freelancers should be prepared to supply tax returns (showing schedule c income) in order to show time-in-business. For the most part, all that is needed for approval on purchases below $35k is a completed one-page credit application and 3-months of business bank statement copies. Needless to say, we've been very busy with the Scarlet-X shipping...

Would love to answer any questions via PM or e-mail!

 

[Jake Wilganowski]

Has anyone considered a SBA loan? Do you think the interest rates would be better?

 

[Nicholas Fitch]

Hey Jake,

SBA loans are an option, but a few important things to remember:

1) SBA loans are generally processed through bank branches... banks generally do not understand the equipment and are not comfortable with freelancers.
2) Processing time: At least 3 months, up to 6-months
3) Blanket liens: The SBA will take a blanket lien on ALL equipment, personal and business assets, real estate and future revenues

SBA loans are generally a better fit for larger acquisitions that wouldn't otherwise be viable (start-up restaurants for example). Rates can be better on an SBA loan, but you give up quite a bit for that lower rate.

 

[Jake Wilganowski]

But since they are backed by the government, insn't some of that "freelance uncertainty" alleviated? Can you elaborate on the blanket lien regarding your services vs SBA? I have a house, a car, and steady freelance income for 3 years.

 

[Jake Wilganowski]

Also, I'm sure lots of people would be interested in knowing the typical term (5-10 years?) for say, a 30k loan. As well as a ballpark interest rate. Thanks in advance.

 

[Andrew Allsbury]

Check out an SBA Express loan, should be a good option if you have been in business for over 3 years, much faster turn around. We actually just used our credit line for our Scarlet. These low rates are fantastic!

 

[Jake Wilganowski]

I checked into that and for some reason I can't remember I thought it wasn't the right choice for me, I'll look again.

 

[Nicholas Fitch]

Well... the uncertainty comes into play due to the fact that unless you are a corporate entity (LLC or INC), the loan is written in your personal name. If you have considerable Schedule C income on your tax return, it would be easy to see that the camera is for business purposes. Where they get concerned is when they are financing a $15k camera package for someone that only shows $5000 in business income. They would have their doubts as to if the purchase (loan) was really for business or personal (hobby) use.

As for liens, basically on an equipment finance agreement (EFA) or lease, the bank/lender's only security interest is the camera/gear itself. No additional collateral is taken and no blanket liens are filed. If you default on an EFA/lease, they repossess the equipment. If you default on an SBA loan... they can come after your house, personal property and future revenues. They are WELL secured and they know it.

 

[Nicholas Fitch]

Terms are generally 60-months MAX, with 3 and 4-year options also available. In this economy, rates/terms are HEAVILY dependent on personal credit and time in business, but to give you some ballpark numbers, financing $15,000.00 would run you about $320/monthly on a 60-month term. Better terms are available with financial disclosure (tax returns, financial statements), but approvals can generally be processed up to $50k with just an application and bank statement copies. Depending on how the lease/financing is structured... there can be tremendous tax advantages. People/companies with tax liability in 2011 may want to finance gear before year-end. IRS Section 179 will allow you to expense (bonus depreciation) 100% of the cost of gear the same year it is put into service. Check with your accountant, but as long as the lease/loan is signed in 2011, the equipment should still qualify for Section 179.

IRS Section 179 info: http://www.irs.gov/publications/p946/ch02.html