Proj.fin.term+loan

1,434 views
1,335 views

Published on

0 Comments
2 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total views
1,434
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
85
Comments
0
Likes
2
Embeds 0
No embeds

No notes for slide

Proj.fin.term+loan

  1. 1. Project Financing Means of Finance <ul><li>Equity Capital </li></ul><ul><li>Preference Capital </li></ul><ul><li>Retained earning </li></ul><ul><li>Debt Capital (Debentures or Bonds) </li></ul><ul><li>Term Loans </li></ul><ul><li>Venture Capital </li></ul><ul><li>Lease Financing and Hire Purchase </li></ul><ul><li>External source </li></ul>
  2. 2. Term Loan <ul><li>It is a long term debt provided by commercial banks and / or financial institutions mainly to acquire fixed assets for a project </li></ul>
  3. 3. Features of Term Loan <ul><li>It is a type of debt financing </li></ul><ul><li>FIs provides Rupee TL and foreign currency TL </li></ul><ul><li>Mainly for investment in fixed assets </li></ul><ul><li>Also for getting technical know how, preliminary expenses and margin money for working capital </li></ul><ul><li>Foreign currency term loan for import of plant and machinery </li></ul>
  4. 4. Features of Term Loan <ul><li>Assets which are financed with TL is the prime security </li></ul><ul><li>Other assets of the firm can be collateral </li></ul><ul><li>Repayable in equal half yearly or quarterly installment </li></ul><ul><li>Interest rate charged is as per credit risk of the project </li></ul><ul><li>In case of default of payment penal interest is charged </li></ul>
  5. 5. Features of Term Loan <ul><li>In a typical term loan, principle amount remains constant, but interest burden declines over a period of time </li></ul><ul><li>Various restrictive clause may be applied on borrower </li></ul><ul><ul><li>Refrain from undertaking any new project without approval of the FI </li></ul></ul><ul><ul><li>Refrain from additional borrowings without consent of FI </li></ul></ul><ul><ul><li>Nominee Director on the board </li></ul></ul>
  6. 6. Term Loan procedure <ul><li>Submission of loan application with Project Report </li></ul><ul><li>Project Report contains </li></ul><ul><ul><li>Promoters’ background </li></ul></ul><ul><ul><li>Particulars of the firm </li></ul></ul><ul><ul><li>Particulars of the project </li></ul></ul><ul><ul><li>Cost of the project </li></ul></ul><ul><ul><li>Means of financing </li></ul></ul><ul><ul><li>Marketing and selling arrangements </li></ul></ul><ul><ul><li>Profitability and cash flow </li></ul></ul><ul><ul><li>Government consent </li></ul></ul>
  7. 7. Term Loan procedure <ul><li>Initial processing of loan application </li></ul><ul><ul><li>Additional information may be asked </li></ul></ul><ul><li>Detailed appraisal of proposed project </li></ul><ul><ul><li>Marketing, technical, financial, managerial and economic appraisal </li></ul></ul><ul><li>Issue of letter of sanction </li></ul><ul><li>Acceptance of terms and conditions by the borrower </li></ul><ul><ul><li>By passing appropriate resolution </li></ul></ul>
  8. 8. Term Loan procedure <ul><li>Execution of loan agreement </li></ul><ul><ul><li>FI sends the draft agreement to the borrower which is to be signed and stamped by the borrower </li></ul></ul><ul><li>Creation of charge over security </li></ul><ul><ul><li>Creation of mortgage, deposit of title deeds and hypothecation of movable property </li></ul></ul>
  9. 9. Term Loan procedure <ul><li>Disbursement of loans. Borrower is required to submit following information </li></ul><ul><ul><li>Physical progress of the project </li></ul></ul><ul><ul><li>Financial status of the project </li></ul></ul><ul><ul><li>Contribution made by promoters </li></ul></ul><ul><ul><li>Projected fund flow statement </li></ul></ul><ul><ul><li>Compliance of statutory requirements </li></ul></ul><ul><li>Based on such information disbursement of loan amount is decided </li></ul>
  10. 10. Term Loan procedure <ul><li>Monitoring of Loan </li></ul><ul><ul><li>It is done at two stages, implementation stage and operational stage </li></ul></ul><ul><li>Implementation stage monitoring </li></ul><ul><ul><li>Regular reports from promoters </li></ul></ul><ul><ul><li>Periodic site visit </li></ul></ul><ul><ul><li>Progress report submitted by nominee director </li></ul></ul><ul><li>Operational stage monitoring </li></ul><ul><ul><li>Quarterly progress report </li></ul></ul><ul><ul><li>Periodic site visit </li></ul></ul><ul><ul><li>Progress report submitted by nominee director </li></ul></ul>

×