Financing Sources For A Project Funding Investment Group

Many projects run in the world today. These include private, government and NGO funded initiatives. Private ventures are solely involved in profitable undertakings while the government deals with both social and development initiatives. However, as part of social corporate responsibility, private companies may build social development projects. In any case, all ventures require financial support to start and run to completion. However, many times funds become difficult to raise. There are many sources of finances for a project funding investment group.

Grants are one of the cheapest finance sources available. Research grants are the most frequent types because they are easily available. They are awarded on merit to support breakthroughs in different fields. They include development, medical, market as well as small and medium enterprises grants. They help finance advancements and ventures like technology, medicine, business, wildlife conservation and service delivery. Other grants are export, training, education, social development and environment.

Loans carry a repayment plan. They are protected and guaranteed by an agreement to make regular repayments in form of installments. They can be availed to support any type of venture. Loans are a great way to finance developmental and capital investments projects. Banking and financial institutions commonly offer them. This is because they are flexible with good repayment terms. These institutions serve the whole country.

Equity funds are not so easy to get. They are mainly procured for investment ventures and incur strict repayment policies plus interest rates. Business angel investors are usually big shots in the business world that look for lucrative opportunities to invest their surplus cash. These opportunities must prove profitability and viability to post good returns. Venture capital includes finances available for investing in the medium term. This is about three to five years.

Asset backed finance is provided for growing businesses and huge corporations. It is secured by value assets. This acts as security to be claimed if money is not repaid. This funding is strict because it is purely for profit. It is availed as invoice discounting, leasing, factoring, trade finance and pension funds. It is used as a backup when other avenues for raising capital are not available like capital markets.

Business relationship finance pools funds together between companies with shared interests. These companies will each contribute a determined and agreed amount. This money is then used in the proposed project. Other examples include trade investors, equity shop, partnership, agencies and distributors.

The types of funding above fall into three categories. Restricted funds are only used to finance a specific purpose. Foundation and government grants usually carry restrictions like designating it to a specific expenditure. Unrestricted funds are used any way that the initiative management sees fit. It is usually raised through individual donations and fundraising.

Bridge financing refers to a temporary situation. It is used to cover operational deficits before the organization becomes liquid. Deficits occur when grant money and contract financing has been promised to be delivered later. The different types of financing sources available for projects are vast. This is the reason most initiatives have been successful.

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