What are the important aspects of project financing that should be addressed first?

1) The total funding requirements of the project;

Accurately formulating a plan for the use of project funds to ensure that the total funding requirements of the project are met is the basis of all project financing efforts. The capital budget for a new project should consist of three parts:

a.project capital investment;

b.overspending provisions for investment expenses;

c.Project liquidity

2) the service life of the funds; In principle, the investor's solitary capital is the fund with the longest service life of the project, and it can only rely on the investment income of the project However, the project focus Any debt funds are time-limited, if the characteristics of the cash flow of the specific project, based on the capital needs of different project stages, use different financing means, and arrange loans of different terms, it can play a role in the debt structure of the oil painting project and reduce the risk of project debt.

3) the cost and composition of capital; An investor's cost of equity is a relative cost concept and is therefore referred to as "opportunity cost" in some cases. The cost of debt funds for the project is an absolute cost, which is the interest cost of the project loan. The interest rate risk of project debt funds is one of the main financial risks of project financing.

Project financing can be a fixed rate, a floating interest rate, or a combination of both, each with its own advantages and disadvantages.

4) Hybrid structured finance refers to a combination of loans with different interest rate structures, different loan forms or different types of currencies. Hybrid structured finance, if properly arranged, can play a role in reducing project financing costs and project risks.

Under normal circumstances, financing refers to equity financing, and formal investment companies usually include 8 steps when financing enterprises: 1. Project screening; 2. Preliminary investigation; 3. Project valuation; 4. Sign the investment framework agreement; 5. Due diligence; 6. Investment decision-making; 7. Sign the investment agreement; 8. Investment management.

It is worth noting that entrepreneurs need to fully prepare business plans, financing roadshows, etc., to make a good impression on investors. In addition, when signing the agreement, it is recommended to find a professional to help check the checks. Matilda Capital Ecosystem provides services such as financing matchmaking, roadshow coaching, and agreement negotiation, and is happy to help you successfully secure financing.

After deciding to use external funds, it is also necessary to compare whether the return on investment and the cost of capital and the corresponding risks are matched on the basis of financing needs. For example, what will be the average annual rate of return (or average annual rate of return) of the investment project in the future? What is the cost (or cost of capital ratio) of tying up capital through financing activities?

What risks do companies need to take? This is what the decision-makers of enterprise management are most concerned about.

Therefore, before carrying out financing activities, the financial personnel of the enterprise must make a more reliable investment income for the future, and only when the investment income is much greater than the cost of capital and the corresponding risk can be tolerated under the premise that the financing activities can be determined.

Features of project financing.

Project-oriented. Financing is arranged primarily based on the cash flow and assets of the project, rather than relying on the creditworthiness of investors or sponsors.

Limited recourse. Risk sharing.

The credit support structure of off-balance finance loans is diversified.

Use tax revenue to reduce financing costs.

The financing structure is complex and the financing cost is high.

The role of project financing.

Financing large-scale projects that exceed the investor's own ability to raise funds.

Provide flexible and diverse forms of financing for construction projects to meet the special needs of construction projects in terms of capital arrangements.

Arranging limited recourse financing for multinational companies' overseas investment projects to limit project risks.

Use financial leverage to achieve the company's target rate of return.

To a certain extent, isolate the project risk from the investor's risk.

Project financing is a financing method in the current capital market, but it is still very difficult to complete a project financing arrangement in the current situation, and a lot of work needs to be carried out

1. Project packaging, so that foreign investors can choose projects that are not only needed by China in a short period of time, but also have less risk for foreign investment.

2. Protection of interests, that is, the interests of both parties are protected to the greatest extent in the whole process of project implementation.

3. Technical communication, that is, through a team of experts (such as financial advisory companies) who are familiar with both international practices and the specific situation of China, to obtain a common language with foreign investors.

4. Grasp the relevant laws, regulations, systems and policies of China into the implementation process of specific projects.

Despite this, there are still a variety of restrictions on infrastructure investment in China, and there are many difficulties in operation, which affect the speed of infrastructure to attract international capital, which is highlighted in:

1. China's foreign exchange system and planned investment system determine that the financing of infrastructure projects is strictly controlled in the near future, for example, all BOT projects must be approved by the State Planning Commission, resulting in most infrastructure projects cannot use foreign capital for development and financing.

2. The legislation is not perfect, resulting in no clear legal basis for the definition of project financing, taxation and other aspects.

3. The cycle of large-scale infrastructure is too long, the cumbersome approval procedures and the inefficiency of the management system at all levels make the project financing cycle sometimes as long as several years. Organizers must take this very seriously and try to overcome it.

Successful project financing arrangements require sponsors and investors to work together to develop robust and reliable project laws and risk-sharing structures. In the case of infrastructure project financing in the form of a BOT, for example, the organizer** must enter into an investment agreement with the investor on the main terms, responsibilities and rights, and these conditions must be described in detail in the concession contract. Since the ownership of the infrastructure by the foreign party in the form of BOT is transferred to the organizer after the completion of the project, both parties are concerned about the value of the foreign party's management rights, that is, the cash flow that the project can obtain, and the organizer** should give sufficient guarantees to the foreign party in protecting this exclusive concession, including the purchase of services to maintain the infrastructure, limit potential market competition, etc.

There should be a clear understanding of the issues that investors are particularly concerned about, such as the possibility and amount of international financing, the exchange of foreign exchange, the determination of the annual fee adjustment formula, the treatment of land use rights, and so on. The flow of international capital is solely for the purpose of making a profit, so international capital will flow to the host country only if the infrastructure project of the host has a good structure and a high level of efficiency.

The content comes from the user: Yizhu Liancheng.

Lack of money is a common problem for entrepreneurs in the process of starting a business, and it is a common practice for entrepreneurs to seek investor financing in the face of financial difficulties. But those investors are not volunteers, they are also pursuing profits, so what should entrepreneurs pay attention to in the process of corporate financing? "What Entrepreneurs Should Pay Attention to When Raising Funds" gives us the answer.

With the large-scale entry of foreign venture capital (VC) and the rapid growth of local VC, the combination of capital and intellectual capital is like a dry fire, burning rapidly. Venture capital has become the hottest topic in the IT and venture capital community. However, how to understand venture capital or venture capital correctly?

Are all companies suitable for venture capital? What should entrepreneurs pay attention to when raising funds?

Should you not be looking for money?

From Wanwang to Commonwealth, from 1999 to 2006, from IDG's $500,000 to many successful financings, Zhang Xiangning, CEO of Commonwealth, not only understands entrepreneurship and capital markets, but also deeply understands the common mistakes and doubts of financiers.

Zhang Xiangning said that the biggest feature of venture capital is that funds must be withdrawn. Exit methods include mergers, acquisitions, and sale of shares. This determines that the market size of the invested company must be large enough, otherwise it will be difficult to develop into a large enough enterprise to do IPO no matter when it develops; Or it must be able to grow to be significant enough to be merged by other companies.

He emphasized: "If the project is not big enough, but it is very profitable, it is not necessary to find venture capital, they are not suitable financing targets for entrepreneurs, especially not to look for venture capital that is particularly orthodox." ”

Xiao Qingping, chairman of Palmtong, who worked with IDG ten years ago, said that every entrepreneur should have a degree and scope of grasp of their own capabilities. Bigger isn't always better. Some people are suitable for early-stage projects, some are suitable for medium-term enterprises, and some are suitable for mature management.

Financing a start-up is not an easy task, and there are many things to be aware of: You have to act according to the laws of the economy in order to get the support of bank loans. The initial business should not be ambitious, but should do what it can, and the bank is willing to lend support.

A good fortune will not only harm yourself, but also affect the bank because it affects your ability to repay. Economies of scale determine the scale of production. In the application of new scientific and technological achievements, it is necessary to persistently combine technological advancement and feasibility with economic rationality and efficiency, and we will certainly receive strong support from the banks.

Choose the right time to apply for a loan. Arrange and implement own funds.

Answer]: A project financing refers to a kind of financing based on the assets, expected income, expected cash flow and so on of the proposed project assets, rather than the credit of the project investor or sponsor as the basis for financing.

The project can be financed in the following ways:

1. **Organization;

2. Bank acceptance;

3. Direct deposit;

4. Bank letter of credit;

5. Entrusted loans;

6. Loan guarantee.

Article 16 of the Company Law stipulates that if a company invests in other enterprises or provides guarantees for others, it shall be resolved by the board of directors or the shareholders' meeting or the general meeting of shareholders in accordance with the provisions of the articles of association; Where the articles of association of the company stipulate a limit on the total amount of investment or guarantee and the amount of a single investment or guarantee, it shall not exceed the prescribed limit. Chang is good.

If the company provides a guarantee for the company's shareholders or actual controllers, it must be resolved by the shareholders' meeting or the general meeting of shareholders.

The shareholders provided for in the preceding paragraph, or the shareholders under the control of the actual controller provided for in the preceding paragraph, must not participate in the destructive voting of the matters provided for in the preceding paragraph. The vote is passed by a majority of the voting rights held by the other shareholders present at the meeting.

1. Market size.

How big the market will be for this product. Of course, the premise is whether our products can have a certain share, whether the product or service can be accepted by people, if there is no such strength, no matter how big the market plate is, it is in vain. Of course, whether the marketing channel is successfully established is also a link that investors pay attention to.

2. The project itself.

That is, how innovative and disruptive the project is, if the products and services that bring significant changes to peers or a certain industrial field will definitely be favored, if the project is mediocre, it is not easy to arouse the interest of investors, and it will be difficult to raise funds.

3. Business model.

The main focus is whether the profit model has been built, whether the product or service has been tested to effectively generate cash flow, and whether it has achieved phased success in the regional or local market.

4. Technical strength.

Technical strength is the core competitiveness of a company, such as technology precipitation, intellectual property rights, and whether technical barriers have been built. Especially in the Internet era, various technologies emerge in an endless stream, changing with each passing day, whether the entrepreneurial project has key technologies, whether there is the corresponding intellectual property rights is particularly important, many technology-based companies are because of the core technology to attract the attention of investors.