What Is Project Finance?

Project financing is a financing method that has emerged in recent years. It is a form of financing that raises funds for more than one year in the name of the project and assumes debt repayment responsibilities with project operating income. There are many forms and they are more flexible. As for trends, each model has applicable fields and trends.

Project financing model

Product payment is for

It is a special debt financing method, that is, if a project requires funds to purchase certain equipment, it can apply to a financial institution

The BOT model means that domestic or foreign investors or consortia, as project initiators, obtain construction and operation concessions for infrastructure projects from the local government of a country, and then form a project company to be responsible for the financing, design, construction and operation of the project construction. BOT

The first is the IMF

Means

A bogey

Confident in your own project, this is the foundation for success for a financier. However, some project parties have exaggerated and brazenly introduced the project, and even easily promised high returns in order to win more funds from investors. In fact, this will give investors an unrealistic and even improper integrity bad impression on the financing side. It is important to know that the project is good, but investors pay more attention to the human factor. After all, people are the internal factors that determine the success or failure of an enterprise project.

Second bogey lack of cognition

The success of the enterprise project is only the first step, and there is no necessary causal relationship with the final success. Investors, as rational economic people, care about whether corporate projects can open the market and achieve profitability. Therefore, investors are more willing to hear in-depth and detailed analysis of all aspects of the company's overall market prospects, competitors, industry environment, risk conditions, financial planning, marketing strategies, expected returns, project team and so on.

Three bogey management lag

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

Four bogey rush

The docking of investment and financing involves huge interests of both parties, and investors sometimes need to go through a period of inspection and negotiation. If the project party recognizes the value and significance of the investor, it must not be rushed or even pressed step by step at this stage. If not, investors will think that entrepreneurs are not calm enough, or have insufficient patience to cope with the ever-changing competition in the mall.

In response to the above four points, the investment and financial circles suggest that when the project owner is confident in his project, he must also be sincere, and use solid and credible market research data, scientific and reasonable strategic planning, and rational presentation methods to move the investment. Furthermore, if the professional knowledge is not enough, a professional financing service institution should be hired to carry out the full tracking service of financing activities. Finally, if the project party has an extremely urgent need for funds, it can adopt a segmented financing method to gradually dilute its equity for financing. This is because, on the one hand, the financing amount is small and easier to succeed; on the other hand, multiple financing can achieve multiple stock price premiums and appreciation; in the end, it can also prevent the financing party's control of the enterprise from being diluted. ^[1]