What is Project Finance?
Project Finance is long-term financing of infrastructure where the projected cash flows of the project is taken as a guarantee for the loan rather than the balance sheets of the borrower.
In the conventional method of financing the borrower promises to transfer to the bank a physical or economic entity (collateral) in the case of default.
Project Financing can be for green field projects or expansion of existing projects.
Project Finance can include a combination of :
Fund based Working Capital like CC/OD
Non fund based Working Capital like Bank Guarantee/LC etc.
What are the End Uses of Project Finance
What is the purpose of Project Finance in Healthcare?
- Setting up new hospital infrastructure
- Acquisition of premises
- Purchase of medical equipments
- Setting up Medical Labs
- Setting up Research & Development Facilities
- Expansion/ Remodelling of existing Hospital infrastructure
Basic Product Features
What is the interest rate?
Floating rate linked to the base rate & credit rating.
Important parameters which determine the rates are project viability, credit history of the borrower, ratings, risk factor etc.
What is the Quantum of Finance?
The maximum loan amount permissible varies from bank to bank, subject to project viability, credit rating of the borrower & other factors.
What is the margin?
The Margin of term loan varies between 10 to 25% depending on the credit rating of the borrower & the proposal
What is the security?
The financing is typically secured by all of the project assets, including the revenue-producing contracts. Project lenders are given a lien on all of these assets and are able to assume control of a project if the project company has difficulties complying with the loan terms.
- Extension of charge over current assets, fixed assets, and other existing collateral if any.
- Personal guarantees of proprietor/partners/promoters
What is the tenure?
The project loan tenure ranges between 7 to 10 years.
How is the repayment?
Repayment can start after a period of moratorium which can range between 6 months to one year.
Repayment can be made flexible through monthly or quarterly payments of interest & bullet payments of principal.
What are the main bank charges?
- Processing fees
- Stamp duty for loan agreement
- Other documentation charges
- Foreclosure charges
- Legal/Valuation/Technical charges
Some of the eligibility criteria:
- Satisfactory CIBIL report.
- Feasibility of Project & Risk assessment
- Promoters Background.
- For existing project, satisfactory financial performance in terms of Sales/turnover and profits.Latest Balance Sheet should be available.
- Satisfactory credit rating.
- Satisfactory banking transactions.
Banks and Financial Institutions offering Project Finance
We arrange Project Funding from Nationalized, Private Sector, Co-operative & MNC Banks in India. We also facilitate lending from top NBFCs. We do not arrange for Private Finance.
Areas of Operation
The professional consultancy fees applicable will be communicated by a “ Letter of Mandate” which will outline the terms & conditions. The work on the proposal starts once the “Letter of Mandate” is formally accepted by the client.
Loan Documentation Requirements
The documentation required for Project Finance will be communicated on a case to case basis.