overview - MediaHedge Underwriting Knowledgebase

# How the MediaHedge Lending Model Works > [!important] Why It Matters > The MediaHedge framework treats film-finance lending as a connected control system, not a bet on one document, one repayment source or one headline yield. The surrounding [[wiki/syntheses/media-finance-lending-landscape|Media Finance Lending Landscape]] is also role-specific: a bank, specialty project lender, institutional credit manager, production insurer, completion guarantor and surety provider may all appear in one transaction while addressing different needs. Capital protection starts with [[wiki/concepts/full-financing|full financing]] because completion and delivery are common dependencies across [[wiki/concepts/pre-sales-collateral|contracted pre-sales]], [[wiki/concepts/tax-credit-collateral|tax incentives]] and [[wiki/concepts/gap-collateral|unsold-rights value]]. It continues through conservative [[wiki/concepts/loan-sizing|loan sizing]], an enforceable [[wiki/concepts/security-package|security package]], operational [[wiki/concepts/cash-control-and-waterfalls|cash control]], a layered [[wiki/concepts/protection-stack|protection stack]] that gives narrow credit to [[wiki/concepts/completion-protection|completion]], [[wiki/concepts/surety-credit-protection|surety]], [[wiki/concepts/production-insurance|insurance]] and other risk-transfer instruments, active [[wiki/concepts/monitoring-and-servicing|servicing]], and value-preserving [[wiki/concepts/defaults-workouts-and-recoveries|workout governance]]. The portfolio and capital-partner layers matter as much as the individual loan. [[wiki/concepts/portfolio-construction|Portfolio construction]] looks through deal count to common failure drivers. [[wiki/concepts/forward-flow-governance|Forward-flow governance]] allocates funding, ownership, servicing, exception and enforcement authority. [[wiki/concepts/financier-return-economics|Return analysis]] then measures what the financier actually receives, when it receives it, and what credit and operating frictions consumed. ## The Lending Model in One View | Stage | Principal question | Primary controls | Durable output | | --- | --- | --- | --- | | Screen | Is the project financeable through delivery? | Complete uses, verified sources, committed equity, contingency | Approved sources-and-uses baseline | | Underwrite | What collateral is eligible and collectible? | Contract, obligor, jurisdiction, conditions, deductions and timing review | Eligible net collateral schedule | | Size | What is the maximum safe commitment? | Asset haircuts, concentration, LTV, budget, term and liquidity limits | Reproducible binding constraint | | Close | Can the financier reach and control the assets? | Security, perfection, assignments, notices, insurance, completion and accounts | Enforceable closing set and cash path | | Service | Is risk changing while remedies remain? | Draw control, cost-to-complete, borrowing base, covenants and reconciliation | Current exception and decision record | | Recover | Which response maximizes net present recovery? | Triage, stabilization, claims, protective-advance tests and reserved matters | Governed remedy and recovery accounting | | Portfolio | Does common-factor exposure remain resilient? | Concentration limits, maturity ladder, stress tests and exception budget | Portfolio availability and risk attribution | See [[wiki/syntheses/credit-lifecycle|Film-Finance Credit Lifecycle]] for the expanded sequence. ## What Supports Repayment The corpus identifies multiple possible value sources but repeatedly warns that they are not interchangeable: - [[wiki/concepts/pre-sales-collateral|Pre-sales and other contracted receivables]] depend on enforceable contracts, conforming delivery, obligor credit, deductions, assignment and payment control. - [[wiki/concepts/tax-credit-collateral|Tax incentives]] depend on qualifying activity, program rules, verified spend, audits, assignment or capture mechanics and collection timing. - [[wiki/concepts/gap-collateral|Unsold-rights or gap value]] depends more heavily on market realization and receives a deeper haircut and concentration limit under the stated policy. - [[wiki/concepts/production-insurance|Production insurance]] responds only to covered events and does not guarantee completion, collateral value or repayment. - [[wiki/concepts/completion-protection|Completion protection]] can preserve delivery value but does not insure distributor solvency, incentive realization or commercial performance. - [[wiki/concepts/surety-credit-protection|Surety or credit protection]] can support a specifically bonded obligation but remains subject to its trigger, penal sum and claim requirements. [[wiki/syntheses/repayment-and-risk-map|Repayment and Risk Map]] compares these paths and their shared dependencies. ## Policy Limits Described in the Available Material The briefs state the following MediaHedge film-policy controls: - tax-credit advance at no more than 85% of verified eligible value; - gap advance at no more than 50% of supported low value; - gap generally no more than 30% of the actual final gross loan; - aggregate LTV at no more than 60%; - gross loan-to-budget at no more than 80%; - term generally no longer than 15 months; - final commitment equal to the lowest amount permitted by all applicable constraints. > [!warning] Evidence Limitation > These are internal source statements, not universal market constants. The briefs do not state an effective date, so current application should be verified before use. See [[wiki/syntheses/policy-rails-and-control-matrix|Policy Rails and Control Matrix]]. ## The Recurring Distinctions The strongest connective tissue across the corpus is the discipline of not confusing adjacent concepts: - eligibility is not valuation, pricing, scoring or approval; - a CAMA is not Article 9 deposit-account control; - a payment direction is not a waiver of defenses or setoff; - a UCC filing is not proof of ownership, attachment, control or priority in every asset; - production insurance is not a completion guaranty or credit insurance; - a market-facing brand is not necessarily the legal lender, policy issuer, guarantor or risk-bearing entity; - stated coupon and accrued income are not realized XIRR or cash yield; - a balanced total budget is not sufficient if cash arrives after the production's liquidity trough; - many loans are not diversified when they share the same obligor, jurisdiction, guarantor or delivery dependency. ## Continue Exploring Use [[MediaHedge Knowledgebase]] as the home page. Financing partners can follow the [[wiki/syntheses/financier-diligence-route|Financier’s Guide]] by investment question, compare participant roles in the [[wiki/syntheses/media-finance-lending-landscape|Media Finance Lending Landscape]], or use the [[wiki/syntheses/credit-lifecycle|Credit Lifecycle]] to organize the same system chronologically. Material transaction decisions still require current policy, executed documents and qualified legal, tax, insurance and program-specific analysis. Read [[wiki/evidence-and-limitations|Evidence and Limitations]] for a plain-language explanation of what the knowledgebase establishes and what still needs independent verification.