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What is a Project Finance

What is Project Funding & How to avail it?

Introduction

India is full of talented and aspiring young minds. Among these are the blooming entrepreneurs and the visionary ones as well who are looking forward to an expansion of their enterprise. This has made project funding in the country quite ordinary and necessary. Since there are multiple agencies for funding, it is important that you choose the right funding agency for the project proposal in India. There are several perks to project funding in India given the number of blooming businesses in the country. Let’s understand in detail.

What is a Project Funding?

Also known as project funding. Understanding this concept has not as complicated as it depicts it to be. The basic need is to have a reliable and practical project for funding. There are various other aspects that are associated with project finance. It has provided for business expansion, reconstruction, or a new business venture.

Indian entrepreneurs are increasing day by day. India also has half a billion SMEs. They are looking forward to the expansion of their businesses. Project financing in India aims at helping not only start-ups but also well-established businesses including SMEs. So, If you are looking for funding to help your business, you can approach the project financing agencies in India.

How to get Project Financing?

There are multiple financial institutions operating in the Indian Debt Market. However, not all of these organizations take exposure in project funding. The ones who are knee-deep in project funding are the government and the cooperative banks. So, each of them has its own eligibility criteria for the sanctioning of the project finance. It differs as per the changes in the macro and micro scenarios.

Before applying for a loan on a project for funding, the applicant business person must have a substantial cost baseline. Thus to support the project financing proposal. There are different ways of getting funds for your project. It is normally given for mid-term or long-term periods. This whole process is quite complicated and confusing. So, it is not easy to understand for a non-finance person. Which makes it even more important to choose a reliable funding agency. 

The process to get Project Funding

Requirements

As the name suggests, this kind of funding will be available only for projects. So, the project can start any new or existing business unit. Below are a few basic considerations for raising finance through project financing:

  1. Project Viability Analysis.
  2. Future Cash Flow.
  3. Mortgage Available.
  4. Payback Period of The Project.
  5. Key Personnel Profile and Relevant Experience.
  6. Location of The Project.
  7. Market Demand of The Product.
  8. And others depending on the project.

Proposal

Drafting a proposal need certains things. Some of the pointers are given as follows:

a. Goals and Objectives

The intentions and the goals that you have for the project that you are proposing must be mentioned clearly in your report. Thus, the objectives of your enterprise will make stakeholders believe or trust your project even more.

b. Assets and Liabilities

You must be able to mention the liabilities. The assets of the project in a way that stakeholder sees potential in your project. So, the assets must make an impact as the stakeholder is looking to provide funds to a project that has the capacity to generate enough revenue.

c. Interest Rate

It is an essential factor to consider. As it will also affect your repayment plan. Thus it is important that you provide an impressive project financing proposal. The rate of interest for project finance depends on several factors. They are as follows:

  1. Credit Score of Company
  2. Credit Ratings
  3. Risk factors in the Project
d. Traceable required proof

The proof and the documents that you provide to support your project financing proposal must be traceable and it must also be –

  1. Measurable
  2. Consistent
  3. Complete
  4. Acceptable

These are some of the aspects that will make your proposal looks good. And therefore increase your chances of getting the project finance. So, you must be careful with the way you spend your funds when you have them.

Repayment Process

The bank will provide the needed amount after the submission of the documents. The amount may be sanctioned periodically. And not all at once depending on the kind of project.

When it comes to the repayment of the project finance, it is retrieved from the revenue that is generated by the project. It starts when the first installment of the loan has been paid. Although, in some cases, only the interest is paid for the first few days. While in some cases, the interest is paid along with the principal amount. And as mentioned previously, the interest rate on the funding of your project is already decided based on certain factors. Thus, the complete repayment structure will be shown at the time of installment.

Project Funding Agencies in India

While planning for project finance, one of the most important decisions to make is to find a trustworthy funding agency for project proposals. So, Terkar Capital is one such agency that is known for its legitimacy and reliability.

We at Terkar Capital arrange maximum finance with minimum collateral. Well, there are several other reasons as well why Terkar Capital is an ideal choice for reliable project finance.

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