8 Apr 2022, 11:02 — 5 min read
A lot of us have a dream of making our project successful and known to the world. All we need is a little push, it could be motivation, it could be one missing bit of a brilliant idea, or it could be the lack of funds. Project funding in India is one of the most important yet not widely known aspects of aspiring entrepreneurs. Before going ahead with the process to get a project financed, it is essential to understand what exactly project funding means.
There are different kinds of requirements at the time of starting a project. Project funding is among the most basic yet significant parts of any business venture. These are the funds that are generated in order to pay for the initial labour, capital, and other requirements. A project loan is provided for new business setups, reconstruction, or expansion of an existing business enterprise.
Project finance is provided considering certain important aspects on which the amount is decided. The criteria that matter at the time of proposing project finance are as follows:
The viability of the project is decided based on its economic merits and demerits. If whatever benefits are to be made from the project economically are higher than the costs and expenditure, then the project is considered as viable. Such an analysis will allow the funding agency to know if the project is worth financing and if the proposing entity is capable of paying off the loan.
In the case of project funding, the mortgage is generally the project itself and the revenue to be generated from it. A loan is provided by the concerned financial institution if there is enough mortgage available on the project. The lender has to see potential in the venture to be able to sanction the loan.
If the project seems to take too long and there is no sooner way to generate revenue, there are chances that the proposal may even get rejected. There are certain professional consultants who will help you in drafting a proposal that will increase your chances of obtaining project funding.
In other words, the businessperson’s ratings are considered at the time of deciding the amount of funding that can be provided. If the proposing personnel has considerable experience in the commercial world, the chances of getting the project finance sanctioned are quite high. If there are any issues found with the personnel or the project, the project may get rejected. Acquiring professional assistance can help you get through to the funding agencies conveniently and help get your project approved.
The location and the requirement of the product or the service the project seems to sell must be well enough to give the lenders assurance that the project will be successful and the borrower will be able to repay the loan in time as well. If the product is common and easily available, there are chances that this can get the proposal rejected.
Even though there are multiple agencies operating in the debt market, there are limited sources to acquire project funding. Mainly, the government and the cooperative banks are the ones that provide such kinds of finances if your project is pleasing enough for them. Else, there are quite limited project funding agencies in India. It is essential to find a trustworthy yet providing funding agency for the project proposal in India as these generated funds are the backbone of your dream project.
Also read: 15 Lessons from failures: A startup’s guide to becoming investment-ready
To explore business opportunities, link with me by clicking on the 'Connect' button on my eBiz Card.
Image source: Canva
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy, or position of GlobalLinker.
Posted byVishal Terkar
Founder @ Terkar Capital
Frequently Asked Questions on Project Funding
8 Jun 2022, 13:45
Difference between Bank Guarantee & Letter of Credit
24 May 2022, 09:33
20 Apr 2022, 10:14
Most read this week
Please login or register to join the discussion