Monday 23 November 2015

Types Of Finance For A Project Funding Investment Group

By Brenda Warner


Today, there are numerous projects running word wide. These include NGO, private and government funded. The government invests in social developmental and high valued initiatives with no market value. Private initiatives are involved in profit creation and maximization. Some companies finance social responsibility activities that help the community. All ventures have to raise operating capital to star and run. This sometimes this is difficult. A project funding investment group is one of many organizations that source for finance for different ventures.

Grants are very cheap sources. Large corporations and individuals with high net worth donate this money. Research grants are more popular and easily available. This is because they help to fund many breakthroughs aimed at improving human life and condition. They include small and medium enterprises, development, market as well as medical. They help to finance much advancement in wildlife conservation, medicine, technology, service delivery and business. Other grants are environmental, training social development and education.

Loans are usually provided with a promise for repayment. They are provided against security deposit and adequate earnings and returns. They are available for any type of projects so long as they can provide a reliable repayment plan. Banks and financial institutions are the most common sources because they have flexible repayment terms. Other common sources include monetary bodies like the International Monetary Fund and the World Bank.

Equity funds are harder to get because they require more credibility. They are acquired to invest in profitable ventures and have strict policies of repayment. Angel investors are big shots in the industry with surplus money who invest in lucrative business opportunities. Venture capital is money availed for a medium term basis usually up to five years.

Asset based funds are used in growing business ventures and large corporations. They must be secured by assets, which act as guarantee for the money. This capital has strict terms because failure to pay results in the seizure of assets to repay the balance. Funding is usually provided as trade finance, invoice discounting, factoring and leasing. It is used as a last result measure when other sources are not an option for example capital markets.

Business relationship funding is available where there is a joint effort in raising cash for a given project. This is only available in a situation where there is a shared interest. This occurs in joint ventures with a binding contractual agreement between companies. Others include partnerships, agencies, distributors and suppliers, trade investors as well as equity swop.

There are three categories of finances available. Restricted one is provided with austerity measures and guidelines. These must be followed, failure to which action will be taken. Foundation grants and government money comes with restrictions. The amount will only be used according to agreed expenditure areas. Unrestricted financing is free of restrictions and is used to run daily operations.

Bridge financing is a temporary solution that funds operations before money promised is available. This situation occurs when deficits occur as the organization waits new cash inflow. This is because of delays in releasing money to ventures. There are many different capital sources available to run projects.




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