There are a large number of companies that approach project finance direct lenders on a daily basis to get the cash they need to complete their latest project. These companies range from telecommunication companies to power plants, mines, transportation companies and so much more.
This type of financial solution is worked according to a single project revenue, which is used to determine how secure the project is and how easily you can repay the agreed amount. It is used widely for companies that rely on contracts for income, but need cash to complete the contract.
When drafting a project finance proposal there are some factors you need to take into consideration. Ensure you are completely honest in your proposal and don’t make the contract sound better than it is or make your business sound stronger than it is. Asking for financing isn’t something to be embarrassed about, it’s used widely by companies, reducing the need to use their own bank account to finance a new contract they have just signed.
A project finance direct lender is going to want to know specific information about your business, so it’s best to put a complete proposal together which you can hand to the company, enabling them to make an informed decision based on what you have told them.
You will want to start with details of the contract. Whether you are building a new telecommunications hub or you have plans to build a new power plant, you want to inform the lender on what you are doing and the purpose of the contract. This can help them determine how viable the contract is and the chances of you being paid, so you can repay them.
Give them a detailed description of your own business from how long you have been in business, your experience with type of contract you are undertaking, how many staff you employ, your average monthly budget and your average bank account balance. These are all things that the company will want to know about your business to help them ensure that they are not taking a big risk by giving you the project financing you need.
Next make a complete list of all the expenses you will have to complete this particular contract from equipment to wages and basic expenses to materials and more. Once you have a list together, write down the cost associated with each one and add up the final balance. This is more or less the amount you will be requesting from the project finance direct lenders.
The list you put together enables the project finance direct lenders to see exactly how the money will be used and ensure that it is something you need and you are not just trying to get cash for no reason. You can imagine how many fake companies they deal with daily, which is why putting a proposal together shows how serious you are about your business and your business success.
Give them some basic history on your business finances. Be honest if you have been in financial trouble in the past. Rather mention this in your proposal than to hide it and they find out when they do a company credit check.
Ensure you include a timeline on how long it will take to complete the project, this may range from a few weeks to a few years. The lender is going to want to know when you will expect a return on your investment.
Depending on the type of contract you are undertaking you may get paid in milestones as certain parts of the job are completed or you may be paid a deposit with the balance at the end or you may be paid the total amount on completion. Whatever your agreement is, your lender needs to be aware of when you are going to see cash again, so they can decide how to proceed.