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Project Financing For The Long Or Short Term

08.12.2009 · Posted in Business News Article

A key step to finding project financing is being able to present your idea in a way that it attracts the interest of investors. nnYour first step is to write in detail what your project is about. By doing this, you will save yourself money and time. Project financing is only possible when the investors have a clear picture of what your project is about. Evaluate your ideas thoroughly and objectively. Additionally, estimate how the funds will be investment and make return predictions. You will be able to attract project financing only when you have your priorities clear. nnAnother question you should meditate is: for how long do I want to owe money to others? Project financing is an investment but it is also a liability. Creating a plan where you calculate your projections will help you to estimate the duration of the project financing you are seeking. nnSome long term project financing needs are (7 years or more): Purchase of land or buildings, construction, extension, renovation of existing buildings, offices, specific installations like roads, networks, distribution, etc. nnYou may be planning to find project financing for investments shorter than 7 years. Examples of those kinds of investments are the installation of heating or air condition systems, purchase of materials for production, data processing, vehicles, trademark filing, patents, stocks, co-partnerships, etc.nnExamples of short term investments are: acquisition of finished goods and materials for production, trainings, research and development, computer software, etc. nnDepending on your project and your business plan, your project funding will be long term, medium term or short term. nnA business may be funded using the capital of the owner, contributions from associates, net income not distributed as well as bonuses or subsidies for investment. Some regional or national support may be treated almost as owner’s equity. nnThe resources in the medium or long term for a period of 2 to 20 years. In this category we will include all long and medium term leasing of equipment, property leasing, national or public support that comes in the form of subsidies or repayable advances. nnThe resources in the short term, for a maximum of 1 year. These resources are also known as exploitation resources. They are variable because they are directly related to the activity level. On this category we find: supplier credits, confirmed lines of credit, discounting, factoring, export credits, loans and bank guarantees.

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