3. Explain in detail the various steps involved (with the importance) in the fin
flows sheet. Why and what the bank needs to check before financing the
project.
Answers
Answer:
The process of development of a project consists of 3 stages:
pre-bid stage
contract negotiation stage
fund-raising stage
Be it a long-term infrastructure, public services, or industrial project, sourcing funds to implement and successfully run an undertaking is an integral part of the entire process.
With Project Financing, a company can arrange for a loan based on the cash flow generated at the end of a project while using the assets, rights, and interests of the concerned project as collateral.
As this scheme provides financial aid off balance sheet, the credit of the Government contracting authority or the shareholders is not affected. Since Project Financing shifts part of the risk associated with the project to the lenders, this financial plan is one of the most preferred options for private sector companies