We provide our clients with professional assistance in obtaining large project financing in from our renowned high-net-worth angel investors and investment funds, including loans for the implementation of large projects.

Do you have an approved project?

Are you looking for financing on favorable terms? contact CP Finance UK Finance 

Our partners include the largest Spanish banks such as Santander, BBVA, CaixaBank and a number of other reputable financial institutions.

We individually approach the selection of source and terms of financing for each investment project, facilitating the receipt of funds on the most favorable terms for the our client.

The main problems in obtaining a business loan and Large project financing:

• Lack of adequate collateral. One of the most common reasons a bank refuses to finance a project is the lack of collateral or suitable project participants. Very often this is associated with high credit risk. We have an individual solution for each client.

• Many banks with different criteria. Lack of experience and in-depth knowledge about how each bank works, as well as the complexity of approving a business loan or interim financing, is the second most common reason for refusal.

Our company is involved in financing large international projects in the energy and transport sectors, waste processing, industrial production, mining and processing of minerals and other industries.

We offer:

• Profitable financing models.
• Conducting a feasibility study.
• Design and construction from scratch.
• Operation, maintenance and repair.
• Project management, etc.

For over 30 years, we have been actively cooperating with private and public companies in Europe, Asia, Africa and Latin America.

Discover the benefits of working with us:

• Three decades of practical experience.
• Active presence in many countries.
• Implemented investment projects for many billions of euros.
• Combining the best financial instruments based on our own know-how.
• Partnership with leading EU commercial banks

We always practice an individual approach to each client.

Since each project is unique, we have developed our own algorithm, which guarantees the creation of optimal conditions for obtaining a business loan, regardless of the degree of credit risk and collateral.

We speak the same language with you and your bank.

Cooperation on financing large projects consists of the following stages:

• Analysis of your investment project. This is the first stage in which we will consider your contract with a financing organization, the current status depending on whether it is a company with a long history or a newly created project company. At this stage, we get a general idea of the situation.

• Development of a financial strategy. At the second stage, our specialists are negotiating with partner banks about specific requirements for the applicant and the project. We develop flexible financing schemes in the absence of sufficient collateral and present you a ready-made plan for obtaining a business loan.

• Signing a contract and service. This part of the work is related to the separation of advance, intermediate and final payments (depending on the chosen strategy), the issuance of the project and a possible change in the terms of the contract.

Would you like more information about large project financing and investment banking services? Contact our experts at any convenient time.

Large project financing: Our core service

Project finance is a unique financing technique used by many well-known corporate projects.

This method is a complex combination of financial, legal and organizational principles that are used to finance large-scale projects in the extractive industries, construction of pipelines and oil refineries, energy facilities, waste processing plants and other facilities.

Project finance is becoming the preferred alternative to traditional methods of funding for infrastructure and other large project financing around the world.

Project financing involves the investment of funds necessary for the implementation of an investment project from scratch. These funds can be generated from various sources, including business own funds (depreciation, retained earnings) and borrowed funds (venture capital funds, bank lending), as well as assistance from international organizations and the state budget.

A very common form is the so-called co-financing, which is expressed in the partnership of two or more institutions in providing financial support for the implementation of an investment project.

Typically, a project investor is a company that implements it. However, in the second half of the last century, the practice of using a wider range of sources, including project finance investment banking, appeared as a steady trend in industrialized countries.

As for state financial support, it is often provided in the form of state guarantees for obtaining loans, tax benefits, and so on. More rarely, entrepreneurs can rely on direct funding from the state budget.

Financing of large investment projects is usually carried out by large financial associations (permanent or created specifically for the implementation of a particular project – a consortium), as well as international financial organizations.

Project finance differs from traditional lending. This type of financing is provided not only by commercial banks, but also investment banks, investment funds, pension funds, as well as specialized funds of international and regional organizations, leasing companies, etc.

Investment loans for business in Europe

A loan from a bank is one of the most common forms of large project financing financing and businesses.

However, at the moment we are observing the following trend: well-known companies with a credit history can get easier access to project finance investment banking than young companies.

A positive point in the case of attracting a business loan is that your company maintain greater independence in managing the project and the funds received.

There are also disadvantages.

As we have already mentioned, obtaining a loan to finance a newly created business is a difficult task. It is very problematic to find a bank that is ready to offer favorable conditions and low interest rates for young companies.

Business loans as a source of funds for the implementation of investment projects are provided on strictly defined conditions.

From the point of view of commercial bank, loan to finance investment project is risky. Therefore, banks usually set a higher interest rate and risk premium.

Banks bear this risk only with reliable guarantees of the effectiveness of the project and sufficient collateral. In many cases, banks act as entrepreneurs and actively intervene in the development and implementation of the project, up to the management of an already commissioned facility.

Some commercial banks in the loan agreement for the construction of a certain investment object reserve the right to convert part of the loan into shares of the company managing the project.

This makes project finance one of the leverage for merging industrial and banking capital.

The reality is that today it is quite difficult to get business investment loans on optimal terms. In this regard, it is extremely important to have a reliable partner who is ready to offer a loan guarantee.

The main sources of project financing

Questions that business seeks answers to when searching for sources of financing:

• How much money is required to implement an investment project?
• What sources of large project finance are available to business?
• What is the cost of various sources of financing?
• What is the weighted average cost of capital for a new venture?
• What is the structure of sources of financing for an investment project?
• When can a business require borrowed funds?

Successful large project financing and investment security will ultimately depend on the correct answer to each of these questions.

Sources of financing are divided into internal and external:

• Internal: retained earnings, depreciation, disinvestment (refusal to invest in other projects).
• External: equity (issuance of common and preferred shares), borrowed capital (bonds and mortgages, short-term borrowed capital), as well as financing through leasing.

As a rule, a company uses several sources of financing for its investment projects.

Financing from each source has its own cost.

The company should find a financing structure in which the cost of providing and using capital is minimal, and the risk can be considered acceptable.

Internal sources of financing

Project financing can be carried out at the expense of retained earnings. The so-called retained earnings is part of the net income that remains after the fulfillment of all obligations, including the payment of dividends.

This income can be used in two ways:

• Reinvestment in the company.
• Distribution of funds among shareholders.

It is also possible financing through depreciation. The depreciation fund of the enterprise is intended to restore worn-out fixed assets.

These funds are also used to finance projects.

Opportunities for using depreciation funds:

• The amount of cash receipts from depreciation, as a rule, is greater than what is needed to replace fixed assets at a certain moment (receipts are always the same or even higher at the beginning if a regressive system is used).
• Depreciation and retained earnings are practically not differentiated and, despite their different origins, they are used together to finance the company’s investment projects.
• Replacement of certain assets is deferred beyond the depreciation period.

Another internal source of financing is disinvestment, which includes the sale of company property, inventory reduction, as well as accelerated debt collection.

External sources of financing

Currently, external sources of financing provide the main flow of funds for business development.

These funds are formed from several sources.

Firstly, it is equity (issue of common shares). A common share, in essence, gives ownership of a part of the property of the joint-stock company.

This has the following consequences for owners of common shares:

• Receiving a dividend, the amount of which is not set in advance.
• Obtaining a share of the property in case of liquidation of the company.
• The right to dispose of retained earnings of the company.
• The right to control the activities of the company.
• Responsibility to the extent of equity in the event of bankruptcy.

These shareholders are the last in line for compensation and run the risk of losing invested funds if the owners of bonds and preferred shares, as well as banks receive all assets as compensation.

The next possible source is the issue of preferred shares.

Features of preferred shares are as follows:

• The owners of these shares are entitled to receive a pre-agreed dividend.
• With regard to receiving dividends and distributing the remaining capital during liquidation, they have an advantage over holders of common shares, but are inferior to holders of bonds and other debt obligations.

It is also possible to raise funds by issuing bonds.

Bonds are securities issued by a company to a lender under a long-term loan.

As a debt document, bonds have a certain nominal value. They are issued for a certain period, and interest paid depends on the established rate.

At the end of the maturity, the bonds are redeemed, that is, the amount equal to the nominal value is paid to creditors.

In the event that compensation is received related to liquidation and other reasons, bondholders have the highest priority (together with banks that have provided business loans).

Project finance and investment banking can be carried out by issuing business loans:

• Bank loans for investment purposes are issued for a certain period (usually 3 to 10 years).
• Loans are paid together with interest in regular periodic payments (annually, six months).
• Sometimes repayment of a bank loan begins after a grace period.

In addition to local and foreign banks, a loan on similar conditions can be obtained from other financial institutions, venture capital companies, as well as from state specialized funds, etc.

For some large projects, one of the alternative sources of project financing is leasing. The use of leasing is associated with the formation of a cash flow based on the price of new equipment, agreed rental payments, losses from non-use of the tax benefit from depreciation and other.

Venture financing is usually directed to startups with fast growth and expected high market value, as well as to established companies.

Its features include:

• Given the high risk and an active role in planning, management and marketing, the venture company expects a high return on investment.
• Financing is carried out over a long period (on average 5–6 years) and is usually carried out through the acquisition of property through shares or a loan, but with the corresponding reservations in the share purchase agreement.

The profit of a venture company is formed in the form of an increase in invested capital when the company becomes public or when a merger or purchase occurs.

Venture capital funds invest in the acquisition of shares in the company.

They assume significant risk — similar to the risk incurred by the entrepreneur, and therefore expect high returns.

Thanks to this source, entrepreneurs get the opportunity to start and develop a new business or innovative idea. They can rely on qualified assistance to manage a new company, as well as take advantage of investor contacts. In turn, the investor receives a high return on investment.

Our financing innovative projects in Europe and beyond

Investments are one of the main factors in successful economic activity, improving quality and reducing costs, improving competitiveness, attracting new customers, etc.

Investments are the use of funds in a certain type of activity for a certain period of time, for which the owner of the funds will receive an income exceeding the initial amount of the investment.

Such an understanding of the nature of investment is limited in terms of innovation.

Traditional criteria for choosing an investment project, which are mainly financial in nature, are not sufficient.

Investment in innovation is the money spent on the development and / or adaptation of an innovative, high-tech and / or scientific product.

Investing involves the targeted use of capital, which leads to the implementation of the company’s development strategy. Investment at the company level is closely tied to planning documents and strategic decisions.

In practice, however, few companies in developing countries associate investment with long-term strategic priorities. In most cases, investments are focused on narrow financial indicators, which are not necessarily associated with strategic prospects or even with the achievement of tactical improvements in non-financial indicators, such as quality, customer satisfaction, image, etc.

Despite the growing importance of non-financial indicators when choosing an investment project, many commercial organizations continue to allocate resources through tactical decisions that focus on short-term financial parameters in the form of cash inflows.

These organizations do not include financing potential long-term opportunities in the allocation of company resources. This requires the creation of a mechanism for integrating strategic planning into the resource allocation process. Streamlining strategic investments requires evaluating each potential investment financially and non-financially.

Investing in innovation is a complex process with high risk.

The investment decision involves the selection of mutually exclusive or competing alternatives for the most efficient investment of resources with an acceptable level of risk.

Financing innovative large projects typically covers the following:

• Analysis of the current situation.
• Forecasting and evaluating potential business opportunities.
• Forecasting potential future changes in the business environment.
• Assessment of the cost of resources: financial, personnel, informational and organizational.
• Assessment of future results in quantitative and qualitative terms.

Innovation is rarely associated with increased productivity and lower costs in the short term.

This is the key difficulty in finding funds.

Another important feature of investing in innovation is the need to manage and control costs throughout the entire product life cycle.

Competencies, information support and technology, as well as organizational structure and the ecosystem are the most important factors in increasing the efficiency of innovative processes.

Of course, resources have a price, but quantitative parameters are not always the most important when implementing an innovative project. Often, quality indicators need to be prioritized to assess resources.

Human potential, considered as an investment in innovation, includes the presence of highly qualified specialists in all necessary fields, as well as the ability to effectively work on various projects in growing teams.

Information technology and information as an investment in innovation presupposes the availability of hardware and software, up-to-date and reliable information of an interdisciplinary nature.

Organizational capital as an investment in innovative activities of the company includes teamwork, culture and spirit of the company.

Due to the lack of necessary investment opportunities for innovation, many East European companies and companies in developing countries are faced with a limitation of innovative development.

We are ready to help you with finding sources of financing for your business, including obtaining investment loans for large project financing.

Our project finance investment banking services

In addition to the standard set of financial instruments, we assist our clients in obtaining loans from leading European banks for large infrastructure, energy and environmental facilities around the world.

Applicants can be both newly established companies and existing businesses with a long credit history.

Depending on the scale of a specific project, we can arrange syndication or external co-financing with other financial institutions, including using European investment mechanisms.

A key element in evaluating potential investment projects is the ability to generate sufficient cash flows to service the financing provided and the normal operation of the project.

The conditions of this type of financing are formed in accordance with the specifics of each project.

For the initial consideration of  large project financing, customers should provide the following documentation:

• A detailed business plan containing a detailed financial model of the project.
• Official documentation on the legal, tax and financial status of the borrower.
• All necessary permits, licenses, contracts and other relevant documents related to the construction and operation of the facility.

To learn more about obtaining a business loan for large investment projects, contact us.

CP Finance UK FINANCE LIMITED
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In addition to working capital loans, which are used by many entrepreneurs, business investment loans are an important tool for financing companies.

However, the requirements and procedures for obtaining such a loan will differ.

From a financial point of view, an investment loan is one of the most attractive options for young companies.

History knows many companies that were able to expand their activities and acquire their current status largely thanks to the long-term financing received from the bank.

CP Finance UK FINANCE offers long-term financing of large projects with an initiator’s contribution of up to 10%.

We finance the following industries:

• Energy sector and renewable energy sources.
• Heavy industry and mechanical engineering.
• Chemical industry and processing of chemical waste.
• Infrastructure and transport, including seaports and terminals.
• Agriculture and food industry.
• Real estate and tourism.

The European financial services market offers a variety of solutions, such as investment loans for new companies.

Of course, in the case of newly established enterprises, the formal procedures and conditions of the loan may differ.

Contact the CP Finance UK FINANCE LIMITED team to learn more about our offerings.

Business investment loans: classification and types

A highly competitive environment requires companies to make quick decisions, which is why business lending is experiencing rapid growth.

Borrowed funds can be used by a business to pay for various operating expenses, investments in fixed assets, or the implementation of specific investment projects.

Differences between the listed types of loans may include, among other things, the maturity of the loan, the method of providing funds, the level of credit risk, the type of collateral used, as well as the procedure for evaluating the borrower’s creditworthiness.

What is a business investment loan?

A business investment loan is a bank loan for financing projects implemented by a borrower, the purpose of which is the construction, restoration and modernization of fixed assets.

Business investment loans are targeted financial products as well as the acquisition of intangible assets or long-term securities.

This means that an entrepreneur who receives an investment loan must use the money received in this way for the purposes agreed with the bank. This type of financing will always be directed to support a specific project.

The purposes for which an investment loan is taken for a period of up to 15 years or more must be clearly indicated by the entrepreneur when applying for a loan. You cannot first receive funds, and only then decide what exactly you will do with the money.

The condition for obtaining an investment loan for a business is a positive result of the financial analysis of the investment project carried out by the bank.

When providing investment loans, the bank often requires the initiator’s own contribution, which reduces the risk for the bank.

To finance large projects, banks sometimes offer syndicated loans.

The loan amount can be transferred to the borrowing company immediately or can be provided in tranches. In the latter case, the receipt of each subsequent tranche usually depends on the fulfillment of the borrower’s obligations under the previous phases.

Financing long-term investment projects

In many developing countries, long-term projects and business ideas are often funded with working capital.

A business investment loan is fundamentally different from working capital financing.

Working capital is short-term in nature.

On the other hand, investment projects for large businesses are usually planned for up to 15-20 years and involve huge investments.

We are talking about a completely different burden of servicing credit instruments.

Working capital financing is short-term and is aimed at covering current needs and payments. It can also be used for certain contracts in order to increase market share or increase a company’s turnover.

However, a working capital loan should not be used to finance investment projects as long-term business needs. For this purpose, there are investment loans with special conditions and long maturities. The logic of these financial instruments is significantly different.

An investment loan is used by a business mainly for the acquisition of fixed assets.

These are buildings, machinery or equipment that will increase the quantity and quality of the products and services offered. We can say that this is an investment.

Paying for raw materials to service the current contract is not an investment, so in this case the business must use working capital financing instruments.

An investment loan for a business can be supplemented or replaced by leasing. The idea is as follows: when we talk about buying machinery, equipment or other property with an investment loan, you will need additional collateral, different from the already acquired asset.

Practice shows that in most cases new companies cannot offer such collateral, and in this situation, one of the possible options is to use leasing to acquire the required asset. If you are going to buy expensive real estate or equipment, but the company cannot provide adequate collateral, you need to focus on leasing as the optimal tool. Business investment loan will require additional guarantees.

How to get a business investment loan?

Applying for a loan is the most difficult part of the whole process associated with obtaining a business investment loan.

Why?

In the case of large loans with a long maturity, banks always use advanced tools, including the so-called credit scoring.

Credit scoring in investment lending is a complex system of algorithms and financial indicators used to evaluate the borrower’s creditworthiness, as well as the risk of possible problems with debt repayment in the future.

An investment loan is always a business-specific tool. This means that a one-time check of the current financial health of the borrowing company and its financial history is not enough. Experts must carefully analyze the activities of the borrower in order to make the right decision.

Even the most attractive investment loan is always provided for a specific purpose.

Therefore, when applying for business investment loans, an entrepreneur will have to prepare the following documents:

• Detailed, professional and sound business plan.
• Reports confirming the financial health of the company.
• Documents from the national court register.
• Statutory documents, etc.

The above requirements will apply to any business investment loans.

Possible goals of an investment loan

Based on the definition, investment loans can be used to purchase so-called fixed assets, intangible assets, shares and securities.

A business investment loans   is used for the following:

• Equipment used to conduct business.
• Real estate and land owned by the borrowing company.
• Any other assets for the production of goods or the provision of services.

Intangible assets, in turn, represent all types of patents, licenses or copyrights.

Since these assets can be bought from the copyright holder, an investment loan can be used for this purpose.

How about securities?

Thanks to the loan, you can buy shares of other companies or bonds. It is important to note that some banks provide businesses with the opportunity to take out one investment loan instead of another loan.

The concept of “investment” can be interpreted in different ways, and you can name a number of possible investment items.

Does this mean that an investment loan can really be used for anything?

This is usually not the case.

The decision to issue a loan is always taken by the bank.

This implies the following:

• The company must convince the financial institution that the investment is profitable.
• Financing of specific projects will allow the company to develop.

It is important to understand that an investment loan is not a form of subsidy.

The bank will provide financing to your company only if it sees benefits for itself in the project.

Thus, the ideal financing scheme should include a high quality and promising business plan.

Finally, your company must demonstrate financial success by growing dynamically and consistently. So the bank guarantees timely debt repayment.

It is critically important to convince the bank that the costs you are planning are of an investment nature and, in addition, will bring significant benefits to the company and its partners.

As a rule, banks do not have a “catalog” of possible options for using a business investment loan. This can be a loan for the purchase of real estate, equipment and a number of other expenses. The main thing is that the bank analyst considers them to be a wise investment of funds.

Investment loan conditions and interest rates

An important condition: to obtain business investment loan, an initial contribution of the borrowing company is almost always required.

In this sense, an investment loan is similar to a mortgage loan, when the bank requires a part of the money in advance.

Some banks provide funds on simpler terms, but obtaining a business investment loan without an initial deposit is a difficult task. As a rule, business lending is associated with a very high risk for the bank. Taking even more risk by providing loans to an entrepreneur who cannot afford to pay 10-20% of the project cost is highly unlikely.

What is the interest rate and general financial conditions of an investment loan for a business?

In most cases, the cost of the loan will consist of the standard loan processing fee and interest.

It all depends on the conditions contained in a particular loan agreement.

Interest rates on business investment loans vary widely. It depends on the economy, the situation in the host country, the industry and the specific project.

In the current market conditions, the issuance of investment loans entails a greater risk for banks than before. This means that the bank can, for example, offer a lower interest rate, but this will shorten the loan maturity.

What to look for when choosing a business investment loan?

A loan is a debt that an entrepreneur will pay off for years.

For this reason, you should carefully study the terms of the loan. Apart from the interest rate (for example, EURIBOR and margin), experts highlight other elements that need to be checked.