What are the conditions for successful project financing?

Project financing is a new financing method in the international financial market after 1970s. In recent years, it has developed into an effective means to raise funds for large-scale engineering projects and has been widely used internationally. The following are the conditions for successful project financing that I shared. I hope it works for you.

What are the conditions for successful project financing? 1. Carefully complete the project evaluation and risk analysis.

2. Ensure that the legal structure of project financing is rigorous and correct.

3. Determine the main funding sources of the project as soon as possible.

4. Ensure the rationality of the project management structure.

5. Establish the corresponding balance and restriction mechanism, clearly define the decision-making procedure of the project, and properly handle the conflict of interests of all parties involved in the project investment (or participation).

6. Ensure that the main investors of the project invest enough resources and assume the management responsibility of the project.

7. Set up an experienced and conscientious project management team.

8. Make full use of the project participants' pursuit and enthusiasm for project interests.

Main types of project financing. Project financing without recourse.

Non-recourse project financing

Project financing without recourse is also called pure project financing. In this financing mode, the principal and interest of the loan depend entirely on the operational efficiency of the project. At the same time, in order to protect their own interests, the lending bank must obtain property rights guarantee from the assets owned by the project. If the project fails to be completed or fails to operate for various reasons, and its assets or income are insufficient to pay off all loans, the lending bank has no right to recover from the project sponsor.

Non-recourse project financing has the following characteristics in operating rules:

1. The project lender has no creditor's rights to other project assets of the project sponsor, and can only rely on the cash flow of the project to repay.

2. The ability of project sponsors to use the cash flow generated by the project is the credit basis of project financing.

3. When the project lender does not accept the project risk sharing, it will need a third party to provide credit guarantee.

4. The financing of this project is usually based on a predictable political and legal environment and a stable market environment.

Second, the financing of limited recourse projects

Financing of limited recourse projects

In addition to taking the operating income of the loan project as the repayment source and obtaining the property right guarantee, the loan bank also requires the third party other than the project subject to provide the guarantee. The lending bank has the right to recover from the third party guarantor. However, the guarantor's liability for debt is limited to the amount of guarantee it provides, so it is called limited recourse project financing.

The model of project financing is taboo-avoiding blind boasting.

Confidence in one's own project is the foundation of financiers' success. However, some project parties blindly exaggerate and brag when introducing the project, and even easily promise high returns in order to win more funds from investors. In fact, this will leave a bad impression on investors, that is, financiers are unrealistic or even "bad faith". Knowing that the project is good is a good thing, but investors pay more attention to human factors. After all, people are the decisive internal factors that determine the success or failure of enterprise projects.

Second, avoid insufficient cognition.

Whether an enterprise project is good or not is only the first step, and there is no necessary causal relationship with its ultimate success. As rational economic people, investors are concerned about whether enterprise projects can open the market and achieve profitability. Therefore, investors are more willing to listen to the financier's in-depth and detailed analysis of the overall market prospect, competitors, industry environment, risk status, financial planning, marketing strategy, expected return and project team of the enterprise project.

Three bogeys: management lags behind.

For an enterprise team, there must be a professional technical leader. At the same time, team members are good at management or market development. In short, their advantages complement each other and each has its own advantages. And the whole team has a good atmosphere and orderly management. Some project parties often pay attention to the packaging and introduction of their own projects and products, but neglect to show their good team building to investors. Project parties, especially entrepreneurs, should know that investors have confidence in a project, first of all, they have confidence in the project team.

Four taboos are eager for success.

Investment and financing docking involves huge interests of both parties, and investors sometimes need to go through quite a period of investigation and negotiation. If the project side recognizes the value and significance of investors, it must not be eager to achieve success at this stage, or even eager to achieve success. Otherwise, investors will think that entrepreneurs are not calm or patient enough to cope with the ever-changing competition in shopping malls.

In view of the above four points, the investment and financing circles suggest that the project parties should be sincere while having full confidence in their own projects, and impress investors with solid and credible market research data, scientific and reasonable strategic planning and rational presentation; Furthermore, if you don't have enough professional knowledge, you should hire a professional financing service organization to track the whole process of financing activities. Finally, if the project party is in urgent need of funds, it can adopt the method of staged financing and gradually dilute the equity for financing. This is done, on the one hand, because the financing amount is small and it is easier to succeed; On the other hand, because multiple financing can achieve multiple times of stock price premium and appreciation; Finally, it can also prevent the financier from diluting the control right of the enterprise.