Important in the development of lending is the widespread introduction of project financing into Russian practice. It represents the attraction of long-term investment resources for large projects using financial engineering technology. The features of this method are that it is based on a loan against cash flow generated only by a specific project, depends on a detailed assessment of the project, operational risks, income risks, their distribution between investors, lenders and other participants on the basis of contractual agreements 1, and financial ensuring the investment process is targeted and long-term.

In the economic literature, there are several points of view and approaches to assessing the economic content and functions of project financing, the definition of the concept itself, often identified with project lending, venture financing, investment lending or investment project financing. In fact, project financing differs significantly from traditional methods of financing investment projects and has its own specifics.

P. Nevitt in his work “Project Financing” considers it as “financing of a separate business unit, in which the lender is ready at the initial stage to consider the financial flows and income of this business unit as a source of formation of funds from which the loan will be repaid, and the assets of this business unit.” units as additional collateral for the loan." The emphasis in this definition is on economic isolation and a new cash flow pattern, which distinguishes project financing from other mechanisms for accumulating investment resources.

A generalization of the experience of foreign countries indicates that project financing is interpreted in two ways. On the one hand, it is considered as targeted lending to the borrower for the implementation of an investment project without recourse (turnover) or with limited recourse of the loan to the borrower. The borrower's payment obligations are secured by cash income generated by the object of investment activity (as well as assets related to the investment project). On the other hand, project financing is considered as a way to mobilize different sources and integrated use of different financing methods, as well as optimal distribution of financial risks. In a certain sense, project financing is one of the types of structured financing and reflects an organizational and technological approach, which differs significantly from the product approach, where project financing is considered as a comprehensive banking service.

Implementing this approach, I.I. Popkov defines project financing as a comprehensive banking product provided for the implementation of a separate investment project and based on a combination of lending and equity financing services.

Project financing has a distinctive feature. Traditional financing mechanisms, as is known, assume that if a company attracts financing for the implementation of a specific project, then the party providing such financing (including in the form of a loan) finances not the project, but the company implementing this project. In this case, all assets of the company act as collateral for financing. The mechanism of project financing involves financing a separate investment project, and the source of funds for returning the received investment resources is the free cash flow generated by the project. Thus, an important (but not the only) difference between project financing and project lending, investment financing and project financing is that only assets acquired for the implementation of a new investment project (IP) act as collateral. With conventional lending, funds are received by the project organizer, who simultaneously acts as a borrower and implements the project. Project financing involves the creation of a specialized company to implement the project, which is the borrower and organizer of the project.

An organizational approach to project financing involves consideration of not only objects, but also entities, which include project participants performing individual functions and taking on a certain share of risk, as well as the structure (scheme) of project financing, the system of agreements (contracts), management models and control. The subjects of project implementation are the initiator or sponsor of the project. As a rule, these roles are played by:

• enterprises interested in attracting additional investments to develop their own assets;
• companies interested in implementing the project;
• an engineering and construction firm engaged for design and construction;
• supplier of equipment;
• operating organization - to manage the project after its completion;
• internal suppliers;
• external buyers;
• an independent engineer (involved to provide a conclusion assessing the technical readiness for the start of the project, the reality of the timing and cost of construction, the feasibility and operating conditions of the project);
• insurance consultant;
• legal advisor;
• a marketing consultant (may be brought in to assess the reliability of the project's performance, especially if there are no firm contracts for the sale of products produced as a result of the project);
• financial advisor (provides the most favorable financial, credit and settlement conditions);
• creditors, etc.

Among the investors, it is necessary to distinguish strategic ones, focused on project management and long-term business growth, and portfolio ones, aimed at diversifying their investments and selling their own share at a certain stage. As a rule, investment funds and banks act as portfolio investors.

Depending on the nature of the investment project, the proportions between equity capital and borrowed funds, which are considered as off-balance sheet obligations of the project initiators, may change. If shareholders are interested in reducing the share of their capital, which has a higher minimum rate of return on invested capital compared to borrowed funds, then creditors are interested in this share being larger. The project company receives the funds needed to implement the investment project from commercial banks or other financial institutions. In this case, tools for attracting missing financial resources can be:

• bank loans, which for a long time were the main source of borrowed capital;
• bonds, the role of which has increased in connection with the implementation of infrastructure projects.

Currently, in economically developed countries, many instruments are used, among which, along with bank lending and the placement of bonds, the issue of shares, the issue of bills and other instruments, as well as their combinations, are used. The participation of international financial institutions or government agencies allows minimizing country and political risks. The project financing mechanism involves taking into account the interests of all parties involved, and the expected profit should compensate for the costs and risks of project participants.

Overcoming the consequences of the global financial crisis involves diversifying the Russian economy, modernizing its infrastructure, technological updating of the production apparatus, and introducing innovations, which is impossible without large-scale attraction of investments from various sources on the principles of project financing. The active implementation of effective investment projects in the Concept of long-term socio-economic development of the Russian Federation until 2020 is considered one of the main priorities. In accordance with the long-term development targets of our country, a fourfold increase in investment (compared to the level achieved in 2007) should ensure overall GDP growth by 2.3 times, and real income of the population by 2.6 times. By 2020, the contribution of the banking sector to investment financing should increase by 2.6 times and amount to 25% of GDP compared to 9.4% in 2007.

The potential that Russian banks have today, unfortunately, does not meet such large-scale tasks. Suffice it to say that, in accordance with the general scheme for the placement of electric power facilities in the Russian Federation, the need for investment in this industry alone by the end of 2020 is estimated by the Government of the Russian Federation at 20.7 trillion rubles, which is comparable to the amount of resources that all Russian commercial banks had at their disposal in end of 2008 (RUB 28.0 trillion).

Each individual bank has even more modest capabilities compared to the overall investment needs of economic entities. Thus, the largest operator in the investment lending market - Vnesheconombank, which manages the flow of investments on the basis of public-private partnerships, plans to make direct investments (in the form of long-term loans to enterprises) in the amount of 850 billion rubles by 2012, in the form of investments in the authorized capital of enterprises implementing investment projects - 120 billion rubles, in the form of guarantees - 100 billion rubles.

The development of bank project financing in our country has a fairly high potential in the post-crisis period, since there is currently a pent-up demand for investments in various sectors of the economy, including the implementation of large infrastructure projects.

In recent years, there has been a growing trend in the use of project financing in the world. During the period 1987-2001. The volume of the international project finance market has grown from $10 billion. per year up to 220 billion dollars. In 2008, this figure reached $250.63 billion. Dynamics of the project finance market in the period 2004-2008. characterized by the following indicators:

• a total of 2,828 loans were issued as part of project financing;
• the total volume of project financing loans amounted to $908,272.3 million;
• the average annual growth rate of financing was 121.2%.

Despite the stable growth in the volume of project financing in the world in recent years, the global financial crisis of 2008-2009. made some adjustments. In 2009, there was a significant decline in lending volumes under project finance. Compared to the previous year, volumes decreased by more than 60% (Fig. 6.1).

Rice. 6.1.

The volume of transactions in 2009 amounted to $79.3 billion. (while in 2008 - $203.3 billion). The most significant decline of about 70.1% occurred in the project finance markets of North, Central and South America.

India became the most active player in the Asian market, showing an increase in project financing by 56.6% compared to the previous year. Based on the results of 2009, the total volume of transactions in India reached $22 billion.

In the Russian Federation, the volume of project financing has always been significantly lower than in many other countries, as evidenced by international ratings. Thus, in the regular rating of banks participating in project financing, which is published by the magazine Project Finance Magazine, There are no Russian banks at all. Our country appears in a number of country rankings, usually in connection with the implementation of large individual projects with foreign participation. A classic example of the use of a project financing mechanism is Nord Stream, Sakhalin-2, South Stream, Gazprom-Yuzhno-Russkoe, where the Russian Federation acted as the initiator.

Thus, in 2009, the Russian Gazprom-Yuzhno-Russkoye project entered the top ten largest project financing transactions in the world and became the fourth most important in the region EMEA(Europe, Middle East, Africa). It is obvious that resource-based industries are the most promising for expanding the use of the project financing mechanism in our country.

Currently, project financing is provided mainly by large Russian banks. However, the question of the availability of participation in project financing not only of large and largest, but also of medium-sized and small banks remains open.

Considering the many forms of bank participation in project financing, it is necessary to introduce new banking products into Russian practice that accumulate the necessary resources. We are talking about methods of raising funds widely used abroad, such as targeted and brokered deposits, conditional investment loans, social and insurance savings, general banking management funds, etc. The use of such mechanisms will allow the bank to increase the share of long-term resources with minimal risk of withdrawal and increase interest private investors in storing funds, since a potential investor, when investing in a bank, knows in advance where they will be placed. The bank actually creates collective management funds and, on its own behalf, places funds in those projects that are seen as promising by direct principals. The needs of bank savers who are inclined to individually invest funds can be met with the help of index deposits, the profitability of which is tied to the income from the project.

Public economic crisis of 2008-2009. began precisely in the area of ​​interbank lending and seriously undermined the possibilities for coordinated actions of groups of banks. As a result, the banking system was faced with objective restrictions on investment lending, which were associated with a shortage of long-term liquidity, the need to significantly increase reserves for risky loans, the problem of “bad debts” and the growth of overdue debt. The problem of lack of long-term investment resources, which are necessary for the implementation of large projects within the framework of project financing, has become more acute. In addition to traditional project financing instruments, such as project lending, large international banks actively use other financing mechanisms. For example, syndicated lending, equity financing and placement of project bonds. In this case, methods of both direct and indirect participation in the financing of large projects are used.

Thus, the problem of the lack of long-term investment resources necessary for the implementation of large projects within the framework of project financing has become significantly worse. Methods of not direct, but indirect participation in the financing of large projects are beginning to come to the fore both in the Russian Federation and abroad.

These include methods that involve the participation of banks in the placement of project bonds. The peculiarity of this scheme is that, within its framework, the bank takes part in financing the investment project not directly, but through a specially established project company, which is commonly called a special purpose company abroad - special purpose vehicle (SPV).

One of the sources of raising funds for a project company is the issue of project bonds. As with bank loans, principal and interest on project bonds are paid only from the cash flows of the project. From a special purpose vehicle's perspective, the procedure for issuing bonds is very similar to obtaining a loan from a bank. Essentially, the borrower receives resources in the form of a long-term loan. The main difference between a project loan and a project bond is that the bond issue is aimed at a wider range of potential investors interested in financing the transaction (the so-called bondholders). Investors can be not only banks, but also institutional investors, such as pension funds, insurance companies, and mutual funds specializing in infrastructure investments.

The similarities between project bonds and project loans are as follows. Firstly, quite often the bonds of a special purpose project company are purchased by a banking pool (the so-called sold transaction). Second, bonds, like any securities, can be traded in financial markets between an investor and another buyer, although in reality project bonds may be less liquid than regular corporate bonds. They are typically sold to a group of institutional investors through a private placement and remain in the portfolio until maturity.

The international project bond market is significantly smaller than the project loan market. However, the project bond market has grown significantly in recent years. It should be noted that the market is concentrated in regions such as the USA, Western Europe and Asia.

There are several reasons explaining the growth of the project bond market:

• the growing demand for the development and improvement of infrastructure requires significant investment, while governments, especially in the context of the global crisis, are not able to provide the necessary investments;
• expertise and interest on the part of institutional investors is increasing in favor of alternative investments of a medium or long-term nature with a certain balance of risk and return;
• International rating agencies are increasingly involved in the assessment of project finance transactions, which helps reduce costs and increase the availability of information for investors.

Project bonds as a source of financing are most actively used in the oil and gas sector. It is also worth noting the growth in bond issuance in the sector private finance initiative (PFf) for the last few year s.

When should project bonds be used? When financing a special purpose project company, issuing bonds is an alternative to syndicated lending - a more common form of raising funds in project financing. However, this alternative has a number of limitations and is only applicable in certain circumstances. While syndicated loans are contracts that are structured according to the needs of the project sponsors, project bonds take the form of securities that are not so easily personalized. For this reason, bookrunners ( bookrunner)" it is quite difficult to find investors willing to buy bonds with many specific characteristics, unless these investors have been identified in advance. In the case of an offering

A bond issue on secondary markets must have standard characteristics, which most likely will not meet the specific requirements of the transaction. It should be noted that bond investors (unlike banks) are most often not ready to bear the risks associated with the construction phase, accepting only the risks of the operating phase. Country risk may also be a barrier to issuing bonds if the special purpose vehicle is located in a country with a high level of country risk. Therefore, raising funds in the form of bond issues is more appropriate when refinancing a transaction when the construction stage has already passed, since in this case the bonds are more similar to asset-backed securities than to a project finance transaction.

The most common form of project bond issuance is a private placement with a pre-determined group of investors. The process for issuing project bonds in a private placement is very similar to the arrangement of a syndicated loan by one or more lead arrangers. The set of participants is quite specific in the case of a bond issue: rating agencies, trustee, paying agent. The role of each of these participants needs to be considered.

Project bond investors have entire departments dedicated to analyzing the creditworthiness of the special purpose project company. However, they tend to make their investment decisions based on the project bond bookrunner's certification of the issuer's quality, as well as credit rating assessments by rating agencies. The assigned rating assesses the issuer's intentions and ability to repay debts on time in the short and medium term. Taking into account the peculiarities of project financing, the most significant ratings relate to the medium and long term.

Rating agencies play a key role when using such a tool for raising funds as issuing bonds, including project bonds. Some institutional investors' bylaws even prohibit the purchase of securities without a credit rating. One of the main tasks of a project bond bookrunner is to present the project to one or more rating agencies. The rating process itself is labor-intensive and time-consuming, which is why the bookrunner contacts the rating agency immediately after receiving the private placement mandate.

Foreign banks have been active participants in project financing for a long time, performing certain functions. In particular, before the global financial crisis (2007-2009), "Royal Bank of Scotland" whose diversified portfolio included energy, infrastructure, oil and gas projects. At the same time, this bank participated not only in financing the project, but also in organizing and managing the loan and financial consulting.

As the analysis showed, for many Russian banks, project financing is becoming a new large and increasingly expanding niche in the banking services market. Banks in the project finance market perform different functions (operations), the main of which are project lending, financial consulting, leasing, provision of certain guarantees, etc. In addition, banks act as investment brokers (investment banks), initiators of the creation or managers of banking consortia, institutional investors purchasing securities of project companies, leasing institutions. In the context of the investment activities (strategy) of banks, a comprehensive analysis of banks’ participation in project financing, consideration of the variety of forms and nature of participation is important.

When deciding to enter a project, banks take into account a number of factors affecting strategic development goals and economic benefits. Economic aspects include forecasts of project profitability, loan terms, optimal investment volume, the degree of control of the bank over the project, the reputation of the project initiator and other indicators that influence decision making. From the point of view of the bank's strategic interests, the financial prospects, social, economic and political significance of the project are assessed. The choice of investment area may pursue the goals of diversifying the loan or investment portfolio, as well as improving the bank’s image.

Project finance is not a standard product and requires significant labor costs, embodied in various operations, products and services of banks. Banking services under project finance are complex and complex, and transactions are active and commission-based. The development of project finance in the Russian Federation will create new demand for banks for a wide range of services, including investment consulting, investment financing, provision of guarantees, etc. In addition, as a result of the implementation of investment projects, new structures will emerge in the real sector of the economy (organizations, infrastructure facilities), which will also form their own segment of market demand for banking services, which will contribute to the development and improvement of banking activities. From this perspective, project financing acts as a means of further development of the banking sector, increasing the efficiency of its functioning and increasing its share in the financial services segment.

Project financing with the active participation of banks can be identified as a separate area of ​​analysis. The most promising areas of development within the framework of project financing are:

• participation in capital;
• consulting services;
• object financing;
• participation in foreign projects through the development of export financing mechanisms; mezzanine financing;
• leasing

It should be noted that mezzanine financing refers to mixed financing instruments - a combination and joint use of debt instruments such as loans, bonds, leasing, and equity instruments (financing through a private equity fund, IPO). The undeniable advantages of mezzanine financing include higher profitability (higher than the standard bank lending rate allows), the ability to convert debt into a block of shares or shares of the company implementing the project.

In general, the analysis of project financing allows us to identify key provisions that hinder its development.

• 1. The decisive factor is the investment rating and the current financial position of the project initiator, rather than the cash flows generated by the project. For many banks, the presence of an existing business of the borrower, as well as the presence of a positive result from the main activity, is a prerequisite for making a decision on financing a project. Thus, the bank reserves the possibility of recourse to the current activities of the borrower in the event of project failure, which is contrary to the principles of project financing. With equally effective and cost-effective proposals, the lender gives preference to projects whose initiators have an existing business in this or a related industry. As a result, a situation arises in which project financing is available mainly to large commodity companies with operating profitable businesses.
• 2. Limited long-term borrowed resources. Two key problems should be highlighted here: the low capitalization of Russian banks and the lack of “long-term” money. The use of significant leverage (i.e., high financial leverage) when financing large-scale projects is one of the key characteristics of the project finance mechanism. The ability to mobilize large-scale long-term investment resources in the required volume for a certain period and at an adequate interest rate is a necessary condition for any investment project implemented under a project financing scheme. In the Russian Federation, the capitalization of banks, as already noted, is still at a fairly low level (by world standards), which does not allow financing large and super-large projects. However, it is worth noting that there are certain positive developments in this direction. Currently, only a part of large banks, which at one time were able to enter the public or international market, are able to independently provide large and long-term investment loans. They are the main source of “long-term” money.

Very often, banks make investments in the form of traditional bank lending using all possible forms and methods of security (pledge of property, securities and other assets, bank guarantees, savings guarantee accounts escrow, guarantees). Russian borrowers can obtain direct large-scale loans for a long period either from a foreign bank or from 3-5 largest Russian banks. At the same time, only the largest companies, first-tier companies on the stock market, or those companies that can provide highly liquid collateral can receive a loan. This situation in the capital market, which allows banks to dictate their requirements for cost and lending conditions, can be characterized as an oligopoly. The absence of “long-term” sources of financing in the Russian market is expressed in the project’s payback criterion, which is established by the bank. If in some Western countries banks accept projects with a payback period of 20-30 years for financing, then in Russian banks this figure does not exceed 5-7 years.

3. Lack of development of debt financing methods and instruments

with project financing. The use of leasing in project financing is only 4-5% when investing in the authorized capital 1 . Higher rates compared to traditional lending (100-200 basis points higher), as well as the condition of payment of principal and interest without a grace period, are the reasons that hinder the use of this financing instrument.

An analysis of the bond market showed that in the context of the global crisis, the ruble bond market is rapidly declining. The foreign investment market, in particular Eurobonds, has undoubted advantages for Russian companies. The ability to attract significant amounts of funds for a longer period is a significant advantage of Western markets. However, only 15-20 of the largest Russian companies can take advantage of these advantages. In particular, the issue of Eurobonds requires serious preparation from the company; the company must prepare reports in accordance with Western accounting standards and publish them regularly, while the reports must be absolutely transparent. Also one of the conditions is the presence of ratings assigned by world rating agencies. There are still few companies on the Russian market that meet all the requirements. In addition, the difficulty of issuing Eurobonds is due to high overhead costs.

• 4. High cost of project financing is a determining factor that deters potential borrowers. The cash flows of many projects are simply not capable of providing such interest. Again, only large companies with high turnover are able to pay for such a project financing mechanism. The high interest rate is due to several factors:
  • the cost of the borrowed resources themselves;
  • risk premium;
  • overhead costs for analysis and project support.

Long-term resources are always more expensive

than short-term ones. This is due to the high cost of borrowed funds. The risks for a bank in project financing transactions are significantly higher than in commercial lending, and accordingly, the risk premium included in the interest rate should be higher. The complexity of analyzing a business plan for project financing is always greater than for commercial lending to replenish working capital, which increases the total cost of financing. These three indicators reach maximum values ​​in project finance transactions, which increases the final interest rate.

5. Consulting. Project financing is a progressive, but rather complex financial technology, in the use of which consulting plays an important role. Consulting helps reduce risks and, accordingly, reduce the cost of project financing. Poor preparation of a business plan is often cited as one of the reasons preventing obtaining bank financing. Out of 100 projects, no more than 10% are selected for further analysis and only 2-3% receive funding and reach implementation. The business plan does not reflect all the benefits of the project, the economic effect is not sufficiently substantiated and the low level of project risk is not proven 1 .

Poor preparation of the project's business plan and the inconsistency of its quality with the bank's requirements allow us to judge the low level of management of the project initiators, the lack of a team of professionals and readiness for the successful implementation of the project.

In order to develop project financing, as well as increase the role of banks in its implementation and more active use of models of “sequential bank financing” and “risk-sharing bank financing”, the following measures may be useful to improve the procedure for refinancing and risk regulation for banks accepting participation in project financing.

• 1. To develop the secondary market for the rights of claims under loan agreements concluded between banks and special project enterprises, and to provide banks with long-term financial resources, it is necessary to create a special government body to support banks financing investment projects (Project Finance Agency). Its functions should include refinancing banks on the terms of assignment of claims under loan agreements for lending to investment projects, as well as providing direct assistance to bank borrowers (special project enterprises) to restructure their existing debt obligations to banks. It is important that the possibility of state support extends to banks whose terms for project financing of borrowers comply with the Agency’s credit standards.
• 2. In order to cover possible short-term imbalances in the provision of liquidity to banks engaged in project financing, adjustments should be made to the current procedure for lending by the Bank of Russia to commercial banks for non-marketable assets. In particular, certain requirements imposed on enterprises whose rights of claim under loan agreements are accepted as collateral for loans from the Bank of Russia (the period of activity of the borrower enterprise must be at least three years, the bank's share of participation in the authorized capital of the borrower or the enterprise's share of participation in the authorized capital bank should not exceed 20%), are initially unfeasible for bank project financing. After all, the recipient of bank loans is a new enterprise specially created for these purposes, and the bank’s participation in the borrower’s authorized capital allows for full control over a large-scale and risky project. Therefore, it is necessary to soften the existing conditions for such enterprises.
• 3. To enhance the participation of banks in the financing of investment projects, it is necessary to abandon the establishment of an economic risk standard for one borrower for project financing transactions (N6) and not to include the volume of the bank’s requirements for the borrower - a special project enterprise - in the calculation of the mandatory economic standard for the total amount of credit risks ( H7). An essential condition for the implementation of this regulatory norm should be the presence of a state guarantee for the financed project, at least in the share of the bank.
• 4. To increase the share of long-term resources with minimal risk of withdrawal and increase the interest of private investors in storing funds in the bank, it would be advisable to introduce into Russian practice targeted and brokerage deposits, conditional investment loans, social and insurance savings, and general funds of bank management. The bank actually creates collective management funds and, on its own behalf, will place funds in those projects that are seen as promising by direct principals. The needs of bank savers who are inclined to individually invest funds can be met with the help of index deposits, the profitability of which is tied to the income from the project.

Investment lending is not identical to long-term lending, although it also presupposes a longer period of use of credit resources, in contrast to short-term loans to replenish working capital.

First of all, investment lending is characterized by the presence of a financed project, new or existing, for the implementation or development of which the credit resources attracted by the borrowing enterprise are directed. In this case, the investor bank actually assumes part of the risks associated with the implementation of the financed project. And the result of the decision made in favor of lending to the project accordingly depends on the income planned from the implementation of the project. Thus, the current financial condition of the enterprise, the amount of profit, the dynamics of growth of indicators, stability, creditworthiness, and solvency of the enterprise are certainly taken into account, but the investment project itself is also of no small importance. When lending to an investment project, special attention is paid to the predicted result, to the planned “output” from the implementation of the project “in life”.

At the same time, which is especially important for borrowers, attracting long-term resources does not reduce the limit on loan amounts for replenishing working capital, that is, the borrowing company has the opportunity to separately finance investment and current goals.

Investment lending traditionally divided into direct investment lending, project financing and financing of construction projects. Each direction deserves separate consideration.

Investment lending involves the injection of long-term (long-term) money into an enterprise, which is closest to the concept of long-term lending. This direction is less risky, since the actual performance indicators of the enterprise for the analyzed period are taken into account, forecast indicators are built, including without taking into account the implementation of the project, since if the enterprise continued to engage in current activities under the same circumstances and at the same time would pay expenses for investment loan. As a rule, this area includes re-equipment, renewal of fixed assets, acquisition of additional equipment, expansion of the vehicle or equipment fleet, acquisition and launch of another similar line of equipment, purchase of another store and similar expansion of current activities. That is, the enterprise continues to move in the usual direction or, if it opens a new direction, then only if it is possible to cover all risks with the profit received from current activities.

Project financing This is the area of ​​lending where the financing of the project is partially undertaken by the creditor bank, since it is intended to finance a project that has not taken place, and the calculation of the project’s payback is based on the expected benefits from the project. Accordingly, the enterprise expects to pay off the loan with the creditor bank using the income received from the implementation of the project. Project financing includes new self-sustaining areas of business for an existing enterprise, or the creation of a new enterprise or new production. The creditor bank can even become a direct investor in the enterprise, that is, invest directly in its authorized capital, if it expects to increase the company's cash flows in the future and, accordingly, receive profit from its investments.

Financing of construction projects represents the provision of loans for the construction of residential, commercial and industrial facilities. As a rule, the bank finances a construction project if it has a ready-made package of the necessary initial permitting documentation for construction and installation work, approved design and estimate documentation, and a registered land plot (long-term lease or ownership right). That is, bank financing is attracted at the investment stage of the project, when the preparatory stage of the project, design and other preparatory work, has already been carried out without the participation of the Bank. In this direction, the requirements for the share of investment by the borrowing enterprise in the implementation of the project of its own funds are the highest. When considering a project, the economic effect of the intended use of the areas under construction is calculated, whether they will be rented out or will be sold in the future.

Basic requirements imposed by the bank on the borrower

Lending to investment projects presupposes the presence of a clearly developed business plan, a feasibility study and, in fact, contracts (arrangements, transactions) providing for the supply of purchased property and the implementation of necessary work.

Of course, the borrower, or in some cases the guarantor company, must have a stable financial position, be able to efficiently service and timely repay the loan provided.

The bank does not undertake the implementation, or rather the financing of the project, one hundred percent; a mandatory share of the borrower's investment of his own funds is required, which ranges from twenty to fifty percent of the total cost of the project. In this case, it is possible to offset investments already made by the borrower at the project preparation stage, but the period for making such investments may be limited. For example, only funds spent by the enterprise on the implementation of the project no earlier than in the last six months will be taken into account as own investments.

Investment lending, like other types of bank lending, requires the presence of collateral, that is, loans are provided against liquid collateral.

When considering a project, the experience of the project initiator in implementing similar projects is taken into account. This factor is not decisive, but increases the likelihood of a positive decision by the bank to provide a loan.

It is mandatory to analyze enterprises affiliated (interrelated) with the borrower.

Basic conditions for investment lending are somewhat different from short-term loans:
- willingness to invest your own funds in the project or document the investments made;
- monthly interest repayment (less often quarterly), but a slight deferment of payments is also possible;
- loan term up to seven, in some cases up to ten years, especially if the borrower is implementing a project with government support. The payback period for investments should not exceed the loan period;
- the debt repayment schedule is agreed upon with the borrower and directly depends on the parameters of the financed project;
- collateral is required;
- the loan is provided both in rubles and in foreign currency (if, for example, imported equipment is purchased abroad);
- different lending regimes are acceptable depending on the specifics of the project;
- a loan can be provided for the purpose of financing previously incurred costs or refinancing existing debt to other credit institutions attracted to finance investment costs.

Risks of hidden lending to investment projects using short-term sources

In the case of attracting short-term loans with the expectation of subsequent prolongation or “on-lending” (since “short” loans are easier to obtain, there is a smaller package of documents, and so on) to finance long-term goals, the borrower’s enterprise risks in the future either not receiving a loan on the same terms, or, what is even more dangerous, being refused the next loan.

If the goals of the enterprise correspond to the investments attracted, both in quality and in terms of timing, the borrower receives a guaranteed unchanged lending conditions for the period of project implementation (subject to the absence of force majeure circumstances). Also, the benefit for the borrower lies in the reduction of costs for registering collateral (especially those requiring registration) under long-term loan agreements compared to short-term ones, which require payment for registration of each encumbrance. In addition, with long-term investment lending, organizational costs, labor and time costs for collecting documents for processing and prolonging short-term loans are reduced.

This technique is the receipt and direction of borrowed funds in favor of a business object, which will subsequently pay off. Enterprises have the opportunity to carry out work without collateral.

Project financing is also called an investment loan. Its main feature is that financial resources are not issued under a state guarantee, but against the funds that the project itself will create after implementation. Some experts consider this financing risky and low-income. Despite this point of view, project financing has many advantages:

• attracting financial resources in an amount exceeding the assets of the investment seeker;
• possibility of implementing “start-up projects”;
• there are no strict conditions regarding the financial condition of the borrower;
• structuring risks between all project participants;
• high internal rate of return.

The standard method of project financing is actively used in many countries around the world. Russia is no exception. Investment lending has become widespread, as it is characterized by the targeted direction of financial flows and the reduction of monetary risks due to a large number of participants. Unlike other forms of lending, it allows you to assess in more detail the solvency and capabilities of the borrower, his reliability. A thorough analysis helps to predict the outcome of the project with small errors.

Criteria

Depending on the characteristics of the project, the structure of investment lending may differ. However, all over the world they adhere to the general principles that are embedded in project financing. Firstly, this method is mainly used to execute new business ideas. Secondly, the source of return on invested funds is the profit received during the implementation of the project, that is, investors count on future income. Thirdly, the share of capital can reach 70% of the total financing. Fourthly, compared to other types of lending, project financing is characterized by stricter control over the borrower’s activities.

Types of project financing

Three types of investment lending are used to implement business projects. The most common and popular is to provide limited recourse financing to the borrower. Its peculiarity is the sharing of risks between all parties involved in the process. Thanks to this, each of them is maximally interested in the successful implementation of the project. The second type is without recourse to the borrower. The lender bears the risk. For investors, this method is promising and popular, as it is more profitable. Tritium type - with full recourse to the borrower. Responsibility for the timely return of borrowed resources in full in accordance with the agreement falls on the borrower. Typically, this method is used when financing projects that are not very profitable.

Disadvantages of project financing

Like any method of financing, investment lending has its weaknesses. If several investors participate, transaction costs increase. To undergo a complex of procedures, a large volume of documents is required. In addition, project financing is characterized by high interest rates on the loan. For the borrower, the main disadvantage is the loss of independence, since in most cases investors reserve the right to purchase securities in the event of successful implementation of the project.

Bank lending for investment projects

Lending to investment projects is not identical to long-term lending, although it also provides for a fairly long period of use of credit resources, in contrast to short-term loans, which involve

First of all, lending by banks to investment projects is characterized by the presence of a financed project, both new and existing, for the implementation or development of which the loan funds attracted by the borrowing enterprise will be used. In this case, the investing bank assumes certain risks associated with the implementation of the financed project. And the decision in favor of lending to such a project will depend on the planned income received from the project. Naturally, with such an option, the current situation regarding the financial condition of the enterprise, the size of its profit, the dynamics of growth indicators, sustainability, creditworthiness, and solvency of this enterprise will be taken into account. But the investment project itself will also play a significant role. When lending to investment projects, special attention is paid to the result predicted from the implementation of the project.

Lending for investment projects by Russian Credit Bank

Russian Credit Bank finances investment projects involving reconstruction, modernization, expansion of existing and creation of new production facilities of enterprises, both large and medium-sized businesses.

The loan provided can be used for the following purposes:

Increasing production capacity;
- financing expenses for major repairs of technical re-equipment;
- acquisition of movable as well as immovable property;
- refinancing loans.

The loan limit can be more than 100 million rubles. Financing is provided in the form of a loan/line of credit. The term for using loan funds can be up to 5 years. The debt repayment schedule is drawn up as agreed by the parties. The loan rate is set individually for each borrower.

The following can be pledged as collateral for a loan:

Land rights (ownership, long-term lease);
- real estate objects;
- property rights;
- shares/participatory interests, incl. assets that are not related to the investment project;
- guarantees from solvent companies;
- bank guarantees.

Lending by banks to investment projects most often assumes that borrowers who can take advantage of such an opportunity are: are legal entities registered in the Russian Federation or carrying out operations, or having assets in the Russian Federation; have a period of actual business operation of at least 2 years; have the necessary licenses and certificates.

Technology for bank lending to investment projects

Effective lending for investment projects requires a different organization of the bank’s work than simple lending. For example, many banks practice visiting the future borrower, even when considering a regular loan application. Thanks to this, bank specialists are mainly familiar with the financial documentation of the enterprise. But, when considering the issue of lending for the implementation of investment projects, much more is often required, namely, we are talking about conducting a comprehensive survey of the enterprise in order to establish the level of riskiness of issuing funds. Such an examination of the enterprise is carried out from the point of view of the presence of possible risk factors.

When making long-term investment lending, there is no need to place high hopes on various standard types of loan repayment security. The most reliable security in the case when banks lend to investment projects is considered to be a fully developed investment project, as well as a high-quality business plan for its implementation. They reflect the actual state of the enterprise with all existing risks and are even more reliable than the future state of the business they are aimed at achieving. A skilled analyst can learn quite a lot from such sources. The partial information provided in them or its complete absence can also indicate to an experienced specialist about the actual situation at the enterprise.

When lending to individuals, a procedure is also carried out to assess their creditworthiness, which can be carried out based on the borrower’s income level, a study of his credit history, as well as a standardized scoring assessment. The assessment of the borrower's creditworthiness by income level is carried out on the basis of data on the income of an individual and the degree of risk of losing this income. Income is determined based on salary certificates or tax returns, after which it is adjusted taking into account mandatory payments and bank risk ratios. Credit history is information about the receipt and repayment of loans by a potential borrower in the past. In order to form credit histories, credit bureaus are created and operate in countries. Scoring is a mathematical or statistical model with which, based on the credit histories of other clients, the bank tries to determine how likely it is that a particular potential borrower will repay the loan on time. In its most simplified form, the scoring model is a weighted sum of certain characteristics, resulting in an integral indicator. This indicator is compared with a certain numerical threshold, which is essentially a break-even line and is calculated from the ratio of the average number of clients who pay on time in order to compensate for losses from one debtor. The loan is issued to those clients whose integral indicator is above this line. Thus, scoring does not answer the question of why the borrower does not pay. He identifies those characteristics that are most closely related to the unreliability or, conversely, the reliability of clients of a certain age, a certain profession, education, the same number of dependents, etc. This is the discriminatory nature of scoring: a person who, according to formal criteria, is close to the group with a bad credit history, most likely will not be able to get a loan.

Project lending and financing

Project financing- this is the financing of investment projects, in which the source of servicing debt obligations is the cash flows generated by the project. The specificity of this type of investment is that the assessment of costs and income is carried out taking into account the distribution of risk between project participants.

Project financing is a method of attracting long-term debt financing for large projects, through “Financial Engineering”, based on a loan against cash flows created only by the project itself, and is a complex organizational and financial event for financing and monitoring the execution of the project by its participants.

Project financing is a relatively new financial discipline, which over the past 20 years has become widespread in developed countries of the world and over the past 10 years has become actively used in Russia. Project financing has its certain advantages, which is why it differs from other forms of financing. It differs from syndicated lending in that it is not impersonal, but targeted. From venture financing - because it is not accompanied by the big risks that always accompany the development and implementation of new technologies and new products. Project finance deals with more or less well-known technologies. The implementation of such projects is more predictable than the implementation of innovative ones. But here, too, there are risks that are of a specific nature, determined by the tasks of project implementation (delay in commissioning of the facility, increase in prices for raw materials, exceeding the construction budget, etc.). The main advantage of project financing is that it allows you to concentrate significant financial resources on solving a specific business problem, significantly reducing risk due to a significant number of parties to the agreement.

Project financing structures may differ depending on the specifics of project financing, the specific purpose of the project, as well as the type of agreement (contract) that is the basis for financing. But there are general principles underlying the project financing method: Project financing is used to finance a relatively “isolated” project (from the legal and economic side) through a legal entity specializing in the implementation of this project (often a separate one is created to receive and use project financing, so called a design company); As a rule, project financing is used more often for a new project than for an already established business (usually used in debt restructuring); The source of return on invested funds is profit from the implementation of the investment project (separated from the financial results of the activities of the project initiators). The share of attracted capital in the total volume of project financing is 70-80% (large “financial leverage”); For project finance debt capital, investors do not provide collateral or guarantees, or the collateral or guarantees do not fully cover the financial risks of the project; Lenders, when paying interest and debts, rely mainly on the receipt of funds from the implementation of the project (future profits), and not on the value of assets and financial indicators of the company. The main guarantees for lenders are company contracts, licenses and exclusive rights to use and develop valuable assets, or technology and production of competitive products. The project has a limited lifespan - the duration of the contract or license for types of work or development of assets, the period of commissioning of objects or structures, the beginning of serial production of products.

Financing with full recourse to the borrower:

It is used, as a rule, when financing small, low-profit projects.

In this case, the borrower assumes all risks associated with the implementation of the project;

financing without recourse to the borrower:

stipulates that all risks associated with the project are assumed by the lender. These projects are the most profitable and attractive for investment, resulting in competitive products as a result of project implementation;

the most common form of financing.

All participants share the risks generated by the project, therefore, everyone is interested in the positive results of the project at all stages of its implementation.

1) design company. It is created specifically for the project, is responsible for its implementation and usually has neither financial history nor property for collateral. It is the use of a design company that is the main distinguishing feature of this type of project.

Responsibility and risks for the invested capital are not assigned to a proven and reputable enterprise, but, like financing, are distributed in a complex way among the participants in the process and are regulated by a set of contracts and agreements.