Project Financing refers to the funding of long-term infrastructure and industrial projects based on projected cash flows of the project. The repayment of this loan can be done using the cash flows generated when the project gets completed. In case the borrower fails to repay the loan, the lender has the right to take control of the project.
To bridge the gap between lenders and borrowers, Special Purpose Vehicle (SPV) is formed by the promoters. SPV is responsible to supervise fund procurement and manage the project in order to make the project success.
Project Financing involves a significant amount of money and it is always better to understand its key features completely.
Identification of the Project Plan: The project financing companies identify and analyze the viability of the project and ensure the feasibility of the project.
Risk Minimization: This is one of the most crucial parts of the process. Before commencing the project financing, the project financing companies evaluate the level of risk involved and cater to tools to minimize all kinds of future risks.
Ensuring project Feasibility: All the concerned factors are deeply analyzed by the project financing companies to ensure the feasibility of the project before commencing it.
Finance Arrangement: In this process, funds are arranged by the project financing companies and borrowed from the banks/institutions whose goals are in alignment with the project.
Debt Equity Negotiation: In this step, both borrower and project financing companies negotiate and decide on the loan and equity ratio and decide on the same.
Documentation and Verification: When the loan amount is mutually decided, the terms of the loan are documented based on the features of the project.
Payment of Funds: Once the documentation is completed, the borrower receives the agreed amount of funds to perform project operations.
Consistent Project Monitoring: The project manager monitors the project at regular intervals to ensure smooth flow of the process.
Project Closure: In this step, the project comes to a closure.
Repayment of Loan: The cash flows from the project are utilized to repay the loan amount.
Project financing investments have seen an upsurge in past few years as it is a long-term, limited recourse financing scheme that is used in funding projects with huge capital.
Resurgent India is a pioneer in project financing and is among one of the top project financing Advisory companies in Gurgaon and India. Their panel of professionals ensures a smooth flow of operations and provide quick project financing solutions. The team provides its potential clients with strategic planning solutions that are in sync with their long-term objectives.