The ability to access financing for projects becomes so easy when the project developers follow the following steps to make sure that their projects are Shovel-Ready and Bankable.

Shovel Ready Projects:

When can a project be considered shovel-ready? in general most private funding entities will require is at a shovel-ready stage before being considered for funding. However, there are many misconceptions about determining when a project is considered shovel-ready. To put it in simple terms a shovel-ready project is a project at the stage where the only missing is the financing itself. The financiers need to know what they are funding with no loose ends.

In general terms, here are a few stages a project must go through before being considered for private funding:

The project must be defined:

In project finance, the project is not defined by the forecasts and the market research presented in the business plan. Although this is information is necessary, it is not sufficient to define the project. Additionally, the project is defined by the credibility of whoever is contracted to buy the output of the project. And where it is appropriate and necessary the surveys and data have will be required and must come from an authoritative credible source to indisputably demonstrate that the project will be capable of paying back the loan. The whoever that will be buying the finished product of your project can be an off-taker, can sign a PPA(if is an energy project), and OMA(in case of Hotels or Commercial Real Estate.

The project is also defined by the strength and credibility of the EPC (Engineering Procurement and Construction)contractor. It is important to demonstrate the EPC track record and its financial stability. You should be able to show the full project cost and its timeline in detail.

The project must be hedged:

Project finance is long-term lending against the projected revenues of the yet-to-be-built asset and relies on the financial stability of the contracted buyer of the output of the project instead of the borrower like any other form of lending. Therefore this brings a unique advantage when it comes to risk mitigation. For example, a project developer who owns the land and decides to build a branded Hotel on it contacts Hilton Hotels and signs with them an operation management agreement with them, hires a credible EPC, and hires and credible consultant in Hospitality to complete a feasibility study. He gets the support of his local authorities and secures all required permits. He then buys an insurance wrap to cover all identified risks from the start of the project until the project reaches the commercial operation day. Sometimes the insurance wraps payment loan defaults if the projects remain protected during the course of the lending terms.

When projected is presented with all these stages accomplished, getting funding for their project will be very easy and fast.

Bankable Projects:

The financing of a Bankable project is a bit different and maybe executed faster than the process mentioned above.

But what is a Bankable project? a Bankable project is a validated project that is supported by a Bank Guarantee or an SBLC or an APN (Avalized promissory note). When a validated project is supported by a bank instrument or cash reserve of 10 Million minimum, it is considered to be bankable. In most cases, these projects can access financing that includes funding for the stages mentioned above to bring the project to shovel readiness.

Here at vol capital, we can facilitate the financing of your projects by connecting you with a network of private capital funders that are ready to look at your project as long as your projects are either shovel-ready or bankable.

We can also assist you in turning your project bankable by recommending services that can provide sponsors/stakeholders who can turn your projects bankable in exchange for equity. Certain conditions apply for this to work, you would have to contact us first. If you need to learn more about our services please click below and send your initial inquiry, we will get back to you as soon as possible.

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