Very few companies, from small and medium-sized businesses to large global players, can freely finance all investment projects, the purchase of goods or the development of infrastructure with their own capital, which potentially reduces their liquidity. Due to the large number of available types of investment loans, businesses seek to find a reliable partner who will provide professional support and mediation both in choosing the right financing instruments and in working with potential lenders. Companies are not always able to fully finance their needs from internal financial resources, which is the reason for using a long-term loan financing for current business activities and even for the implementation of long-term projects.
For this reason, companies tend to resort to a loan and financing tool for the implementation of capital-intensive projects. Due to the large number of available types of loans, businesses seek to find a reliable partner who will provide professional support and mediation both in choosing the right financing instruments and in working with potential lenders.
Long-term loan financing for large businesses and infrastructures
Viola Funding Limited offer long-term loan financing for large businesses, including projects in energy, industry and infrastructure.
We offer the following services: • Project finance. •Long-term investment lending. •Financial modeling and consulting. •Documentary letters of credit. •Loan guarantees, etc.
Overview of credit and loan financing
With loan financing, the company raises external capital for both short-term and long-term needs. While short-term debt financing gives companies the financial flexibility they need, long-term loans in large volumes can make businesses more dependent on lenders.
The investor financing the bank does not become a shareholder of the company. However, the lender returns the main part of the loan and interest. If the company goes bankrupt, the bank even has the right to part of the debtor’s assets. On the other hand, the lender has no voting rights and is not responsible for the actions of the borrower.
Credit financing is primarily understood as the use of borrowed funds for the implementation of certain projects. It serves an element of external financing of economic activities, which plays an important role in any business. With debt financing, the company receives external capital.
In order for a company to successfully apply for loan financing, lending institutions request appropriate collateral and detailed project documentation for review. This allows banks to ensure that the borrowing company is really creditworthy and is really able to repay the borrowed funds on the agreed terms.
Documents attached to a loan application usually include the following:
• Project business plan •Feasibility study •Profit and loss statements. •Information about the borrower’s assets.
• Debt obligations.
This information is carefully checked by credit institutions.
Terms and condition of business financing
In most cases, short-term loan agreements are very flexible and tailored to specific financial models to allow borrowers to repay current debt in a series of payments over several months. On the other hand, long-term loan financing is suitable for the most costly investments. This explains the high capital requirements that can only be provided by third parties. This form of financing also creates a certain dependence of the company on the financing bank. On the other hand, small and medium-sized businesses get a real opportunity to finance large investments.
A key role for business is played by the differentiation of forms of financing according to their terms.
Investments are to be covered by the loan, the decision is usually made in favor of one of two options:
Short-term loan financing includes all types of borrowed capital and
Long-term loan financing This form of financing usually includes bonds or loans for a period of several years.
The cost of loan financing
Business loan financing conditions depend on the following factors:
•The creditworthiness of the borrowing company. •The presence of assets that can serve as collateral for the loan. • Providing loan guarantees from third parties. •The credit risk according to the financial institution’s own assessments. • Agreed deadline and schedule for the return of funds. •Interest rates and terms of refinancing. • Bank financial plans. •Other factors.
The real cost of loan financing is an important consideration for a potential borrower and its project partners. Banks expect to receive interest on the capital provided, and financing conditions can vary significantly depending on the type, scale and timing of the project.
Thus, it is in the interests of the company to timely take into account a set of internal and external factors on the level of costs when planning loan financing.
Current alternatives to loan financing
The choice of financial instruments in each case will depend on the strategic goals of financing, the scope and timing of a particular project.
As alternatives to loan financing, companies can resort to classic methods of raising capital:
• Mezzanine financing, for example, in the form of subordinated loans.
• Factoring is the sale of receivables from a factoring company at a discount. This allows the business to immediately receive the required capital from the factor.
• Equity capital is available to companies in the form of funds from investors. In this case, the investor bears the risk for the success or failure of the business project.
Viola Funding Limited is ready to offer flexible business financing schemes, including long-term loan financing, project finance schemes (PF), mezzanine instruments and others.
We also develop individual financial models for large investment projects and provide consulting support to corporate clients at all stages of the project.
Contact us to find out more.
eMAIL:[email protected]
Website:https://viola-funding.com/