PROJECT FUNDING
Project Funding in India
When starting a new project or introducing a new aspect to the business, functioning doesn’t meet the planned finance schedule all the time. Some financial leverage is needed to make the project come to reality. Thus, project funding comes into the picture. Project Funding addresses the monetary requirements of the exclusive project. It means a loan obtained for fulfilling the finances that a new project brings along with it. Here the collateral security is the project itself. So, it means the loan can be repaid after the project completes or begins generating revenue.
Project funding is of two types in terms of the collateral required –
Primary and secondary. The primary form of collateral is the project itself. And the secondary collateral is the value of the loan and this collateral is apart from the project. The reason for this basically, is the profile of the company. How old is it? whether it is a newly established firm? or a firm that has been in business for long years? The risk factor involves the perspective of banks and lending institutions.