Whenever you undertake a new project or anything that is completely new or a novel plan or simply an innovative plan, it is very important that you have proper funds at your disposal all the time in order to have a better operation carried out and also to ensure that there is no delay in your project progress due to lack of funds. But generating funds all at once, that too from your own hands is an improbable task no matter how wealthy you are. The only option available in this case is to contact or catch hold of someone who is ready to fund your project. But there are many aspects that you have to learn about financing a project which requires lots of attention. This article will provide you with all that stuff and please read on to find out all aspects regarding project financing.
First of all, you contact a moneylender and that moneylender may or may not finance your project considering the credibility of your project. If your project is something that is feasible probably then you will have a good chance of getting your project financed with ease. The reason I mentioned about the credibility is that moneylender is the person facing the music in this situation because the debtor or the borrower is not entirely liable for the money if the project turns out as a failure and this is the reason why project financing is also termed as “limited recourse” financing.
Having said that it is not entirely a burden for a moneylender because there is never a single financier for financing a project and the risk is split between them. So, there is not much of serious effect for a moneylender. However moneylenders are not dumb enough to fund a project and see it in turmoil. They will take all precautionary steps in order to absorb or eliminate the possible risks associated with the project and do every little thing that are necessary in order to make that project a successful one.
Another very important thing that everyone should understand is about the BOT type of financing. BOT is nothing but Build-Operate-Transfer. In BOT type of project financing the sponsors invest in the project, say a road project then they operate the project for a particular period of time for their benefits and finally they transfer the project to the original owner once the time period expires.