Project Financing: Types And Application Conditions

Project financing: types and conditions of application, project financing, project financing, project management, a company established and funded by the project, and item company undertaking loans.

Item company's cash flow and proceeds are used as repayment sources, and item company's assets are the guarantee of loan security.

The financing method is generally applied to large scale capital construction projects such as power generation, roads, railways, airports, bridges and so on, and the application areas are gradually expanding.

There are two kinds of project financing: 1, no recourse project financing, and no recourse project financing, also known as pure project financing. In this way of financing, the repayment of principal and interest of a loan depends entirely on the operational efficiency of the project.

At the same time, in order to protect their own interests, the loan bank must obtain the real right guarantee from the assets owned by the project.

If the project fails to build or operate due to various reasons, its assets or benefits are not sufficient to repay all loans, the lending bank has no right to recourse to the sponsor of the project.

2, a recourse project financing, except for the operating proceeds of the loan project as the source of repayment and the guarantee of real rights, the loan bank also requires the third party other than the project entity to provide guarantee.

The lender has the right to recourse to the third party guarantor.

However, the liability of the guarantor to bear debts is limited by the amount of guarantee provided by them, so it is called limited recourse project financing.

The application condition of project financing is 1, and the project itself has been approved by government departments.

2, project feasibility study report and project design budget have been examined and approved by relevant government departments.

3, the introduction of foreign technology, equipment, patents, etc. has been approved by the government's economic and trade departments, and has completed the relevant procedures.

4, the technology and equipment of the project are advanced, applicable and complete, with clear technical guarantee.

5, the production scale of the project is reasonable.

6, the project has a good market prospect and development potential, and has strong profitability.

7, the cost of project investment and the cost forecast are more reasonable.

8, the raw materials needed for the production of the project have a stable source, and the supply contract or letter of intent has been signed.

9, construction sites and construction sites have been implemented.

10, project, construction and production of water, electricity, communications and other supporting facilities have been implemented.

11, the project has better economic and social benefits.

12, other project related construction conditions have been implemented.