Long Term financing for Large construction Projects : viola-funding June 13, 2023

Long Term financing for Large construction Projects :

Financing a large construction Projects
Financing a large construction Projects; Long-term investment loan

Long-term bank loan, project finance (PF) and private investment are well-known methods of financing a large construction projects. During the period of quarantine and economic downturn, many developers have experienced difficulties in completing planned projects and starting new construction. This situation forces businesses to look for alternative sources of funding. The most popular source of funds for developers is investment lending.

Recently, however, banks have become more cautious, and many developers find it difficult to obtain large loans. The most important thing in investment lending is flexible adaptation of the financing structure to the requirements of the project.

Choosing reliable private lender for a large investment project is a priority.

Viola Funding Limited  offers financing for a large construction projects, including the construction of factories, power plants etc.

Selected sources of financing a large construction project

Investing in a large construction projects requires a multi million dollar costs. It may seem that experienced developers should have no problem with this. However, in the face of a lack of funds, many companies are abandoning promising projects. To maintain financial liquidity and business activity, developers should consider applying for an investment loan.

Generally, there are many options for financing a large construction projects. Most often, self-financing, attraction of external funds, or various combinations of external and internal sources are used.

•Debt financing (for example, construction loans, non-bank loans, leasing, bonds), as well as issuing securities (issuing shares and raising venture capital).

•Self-financing of construction: net income, depreciation, sale of assets, tax savings as a result of investment incentives.

More and more large companies in the construction industry decide to use investment loans for their projects. Today, developers are attracted primarily by speed, flexibility and a minimum of formalities

Project finance in the construction industry; roles and participants

To harness a full advantage of modern tools for financing a large construction projects, it is often necessary to create an independent business entity. Its task will be to implement a specific investment project.

A large construction projects can be carried out within an existing company that has worked with other construction projects, or it can be carried out by  special purpose vehicle (SPV).

Regardless of the field of activity, project finance today plays an important role in the implementation of large construction projects around the world.

Our  team is ready to provide clients with a full range of services, including financial modeling, legal advice, assistance in registering an SPV, raising funds on the most favorable terms of 2% interest rate annually.

Alternative sources of funding for construction Project

The most viable way to raise funds for the implementation of construction projects is to issue corporate bonds of development companies.

Funds raised via project owners bonds are an ideal example of bridge financing. They can be a valuable addition to loans. It should be noted that the success of bond financing directly depends on the credibility of the project owner. Therefore, this method of financing is chosen by well-known companies that have achieved numerous successes and collaborate with recognizable brands.

Public financing of a large construction projects has great investment values. The implementation of crowdfunding as a social investment tool is gaining supporters both among developers looking for an alternative source of funding and among investors.

Bank lending continues to be the most popular and familiar form of financing for construction projects around the world. But the economic downturn caused by the COVID-19 pandemic shows how problematic and risky it is for developers to rely on one tool to finance their operations.

Construction projects for Investment lending

An investment loan for large construction projects is a popular financial product that is intended for multi-million dollar development projects, for example, the construction of a residential complex. This solution is chosen by the majority of developers currently working in real estate due to the favorable conditions and the minimum contribution of the initiator, which ranges from 10 to 30% of the planned investment costs.

An investment loan for construction can be used for the following purposes:

•Construction site preparation.
•Acquisition of shares from other real estate companies for development.
•Refinancing of various real estate investments.
•Finishing works and preparation of the building for sale.
•Renovation or modernization of real estate.
•Civil works.

Loan funds can be transferred to the borrower once in full or in separate tranches (from 10 to 50% of the project cost) according to the schedule.

 Success of a construction project; The basis

The risk of financing the entire project is significantly reduced. The fulfillment of these conditions is important from the point of view of other partners funding the project. This allows the parties to more effectively control and protect their investment.

Some developers are still trying to implement the initial stages of the project, while gradually applying for official permits. However, a loan can be issued only after receiving all permits (including those related to environmental protection and the interests of the local community).

To obtain a construction investment loan, it is important to attract a reputable expert in technical and construction issues. The task of an independent expert is to control the quality of all investment and related documentation.

Viola Funding Limited provides a full range of services in the field of construction

Write a comment
Your email address will not be published. Required fields are marked *