Today we are bringing you all about Project Finance.

This Article Covers

• - What is Project Financing?
• - What is the source of Project Financing?
• - How to raise the Funds?
• - What is Project Report or Project Forecasting?
• - Government Benefits

What is Project Finance ?
Now comes the question to which Bank or NBFProject Finance is funding of long term Industrial and Infrastructural projects with a combine source of Equity and Debt from non recourse or limited recourse financial Structure. Repayment of Project Finance is primarily through cash flow generated through Project and the Project Assets are the primary security for lenders. Lenders may ask for collateral security in case of High Risk Projects or when cash flow generation can’t be ascertained with accuracy. C you should apply for your Home Loan. For this we advise you to consult us as so many questions needs expert opinion like processing fees, time for disbursal of your loan, loan tenure, EMI, rate of interest etc.

What is the source of Project Financing ?
Source of Project Financing.
Project finance may come from a variety of sources. The main sources include equity, debt and government grants. Financing from these alternative sources have important implications on project's overall cost, cash flow, ultimate liability and claims to project incomes and assets.

How to raise the Funds ? and What is Project Report or Project Forecasting?
Raising of Funds and Project Forecasting.
For raising funds through above sources you need to reach to the concerned investor who will invest in your project through different routes like equity, debt or a combination of both. Before Approaching a Proposed Lender you need to have in depth working which is called Project Forecasting or Project Report.
Your Project Report must cover following points.

• Background of Promoters (Industry Experience, Education Qualification).
• Industry Overview in India and Abroad.
• Market Updates regarding Technological and other Advancement.
• Proposed Place of Production.
• Proposed Production Technique and Required Machinery with Quotation from Suppliers of Machinery.
• Production Cycle Time which should be considered from sourcing of Raw Material to Final Delivery To Customer.
• Stock or Inventory Requirements for Trial and Commercial Production.
• Project Profit and Loss statement for at least 5 Years.
• Project Balance sheet for at least 5 Years.
• Important Ration Calculations like GP Ratio, NP Ratio, Current Ratio, Liquidity Ratios, Stock Turnover Ratio, Interest Coverage and Debt Equity.

Government Benefits:
Collateral Free Borrowing.
The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals/ third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed. The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of an MSE unit, which availed collateral- free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 per cent of the outstanding amount in default. The CGTMSE would provide cover for credit facility up to Rs. 100 lakh which have been extended by lending institutions without any collateral security and /or third party guarantees. A guarantee and annual service fee is charged by the CGTMSE to avail of the guarantee cover. Presently the guarantee fee and annual service charges are to be borne by the borrower.
Capital Subsidy (Credit Linked Capital Subsidy Scheme: CLCSS)
The objective of the Scheme is to facilitate technology up-gradation in MSEs by providing an upfront capital subsidy of 15 per cent (on institutional finance of upto Rs 1 crore availed by them) for induction of well-established and improved technology in the specified 51 sub-sectors/products approved. In other words the major objective is to upgrade their plant & machinery with state-of-the-art technology, with or without expansion and also for new MSEs which have set up their facilities with appropriate eligible and proven technology duly approved under scheme guidelines. The objective of the Scheme is to facilitate technology up-gradation in MSEs by providing an upfront capital subsidy of 15 per cent (on institutional finance of upto Rs 1 crore availed by them) for induction of well-established and improved technology in the specified 51 sub-sectors/products approved. In other words the major objective is to upgrade their plant & machinery with state-of-the-art technology, with or without expansion and also for new MSEs which have set up their facilities with appropriate eligible and proven technology duly approved under scheme guidelines.