An investment loan is raising funds for a specific purpose. Investment lending: concept, conditions, advantages Bank investment lending
Investment lending is a product that appeared on the financial market more than 10 years ago. It is relevant for start-up entrepreneurs or already existing organizations, and contributes to their rapid development by attracting credit funds for the purchase of equipment, buildings and other property.
What is investment lending in simple words
So, investment lending is lending money to a business (starting or operating) for its development. According to the structure of funding sources, it is divided into several types:
- Banking: money is allocated in the form of a targeted loan, or a revolving or non-revolving line of credit;
- State, when funds are transferred from the federal or municipal budget. This is available only for certain industries, the development of which will be economically beneficial for the country;
- Money from foreign organizations. Investments are made in a Russian enterprise, and the investor receives a profit from the income. Foreign banks can also be lenders.
The most popular investment bank loans are issued for the following purposes:
| Project finance | Funding to expand existing business | Investment in construction |
| Investments are made in a new project or enterprise | Money is invested in the purchase of new equipment, the construction of additional production facilities, etc. | Involved in the construction of any type of space, usually after the company has received all permits and licenses |
| The loan amount is calculated from the potential profit | The profitability of the organization for different periods of time is taken into account, from this the loan amount is calculated | To calculate the loan, the amount of the borrower's own money invested, the potential profit from the use of financed real estate is taken into account |
| You will need a business plan with detailed calculations | Accounting reports and tax declarations are submitted to the bank for consideration of the application. | Reports on actual and planned costs are sent to the bank |
Note! There is also foreign currency investment lending, in which the company is given money in foreign currency. For example, Uralsib Bank has such an offer: the loan term is up to 6 years, the minimum amount is equivalent to 50,000,000 US dollars, the form is a one-time loan or a credit line (revolving or non-revolving). Property is pledged.
Investment loan: types and classification
Investment loans are divided into several types:
- For capital investments: for opening a new enterprise or expanding an existing business, technical re-equipment of production, for reconstruction;
- By the frequency of lending: one-time or credit line (cyclical and seasonal);
- By industry: for industry, the agricultural sector, retail chains, communications, transport services;
- By investment objects: increase in capitalization, replenishment of working capital, intangible or labor assets;
- By loan terms: short-term (1-3 years), medium-term (3-5 years), long-term (from 5 years).
Formula for calculating investment loans
Each bank uses individual formulas for calculating terms, amounts and obligatory payments on loans. Consider a conditional example of monthly payments, which may differ markedly from the offer of a particular bank.
The company takes a loan of 5,000,000 rubles. for a period of 1 year (12 months) at a rate of 10%. The monthly payment will be calculated as follows:
The monthly interest rate is determined: 10/12 = 0.83%
(5,000,000 × 0.83%) × 12 = 498,000 rubles. per month. In total, for the year it will be necessary to pay 5,976,000 rubles, the overpayment is 976,000 rubles.
Please note: the overpayment is almost 20% of the loan amount, although the rate on it is 10%.
If the loan is taken for a longer period - for example, for 10 years - then the overpayment can increase significantly, although the monthly payment is also reduced accordingly.
Requirements for borrowers for investment lending
Investment lending is a big risk for banks, so they impose increased requirements on borrowers:
These are just general criteria. To assess the reliability and solvency of borrowers, banks use individual methods. In fact, investment lending is similar to other secured loans, but, unlike them, the lender and the borrower have the same goal - to increase profits for the enterprise. This is beneficial for the entrepreneur for obvious reasons, but his financial well-being is also important for the creditor: if there is a risk of a decrease in profitability after the conclusion of the contract, this may entail losses for him.
Investment lending programs
Consider a few bank offers:
| Name of the bank | Term | Bid | Goals | Loan form | Sum |
| Rosselkhozbank (only for legal entities) | Up to 96 months | individually | Purchase of transport, real estate, equipment, replenishment of fixed assets, reconstruction of premises | Lump sum or credit line with a limit | Up to 60,000,000 rubles. |
| VTB | Up to 12 years old | From 10% | Acquisition of goods, equipment, real estate, transport | One-time loan or non-renewable line of credit | Up to 150,000,000 rubles. |
| Sberbank | Up to 15 years | Financing of leasing transactions, investment projects, import of goods, replenishment of working capital, and other purposes | One-time loan or all types of credit lines | Calculated individually | |
| UniCredit Bank | 1-10 years | individually | Goods, equipment, business expansion, real estate, transportation | One-time loan | Up to 73,000,000 rubles. |
Pros and cons of investment lending
To understand whether it is worth resorting to investment lending in banks, it is enough to familiarize yourself with the advantages and disadvantages:
| pros | Minuses |
| Emergence of additional financial flows | Collateral must be provided: real estate of the enterprise, transport, other non-current assets. Encumbrances are removed only after the return of the debt |
| With the right approach, this can increase the profitability of the enterprise. | High interest rates: on average, they range from 13 to 16% per annum |
| Opportunity to receive larger amounts compared to other types of loans | Large loan maturities |
| Such loans are not issued to everyone, it is very difficult to get them. | |
| Granting a grace period (deferred payments) for up to 18 months on average | If money is allocated for the purchase of property, it is subsequently pledged to the bank, and until the closing of the contracts, the owner will not be able to sell it if necessary |
If an entrepreneur needs a small amount (up to 10 million rubles), it is better for him to get a regular consumer loan. Interest rates on it and an investment loan can be approximately the same (13-16%), but the latter is much easier to get, and besides, it is possible to borrow money for business development without providing collateral.
conclusions
Large companies represented on , are in a better position than others: to raise funds, they can issue a package of bonds with a noticeably lower coupon rate than they would pay on an investment loan. Moreover, in addition to ordinary bonds, companies can issue and - which allow you to write off debt without becoming bankrupt.
But at the philistine level, the concept of "investment loan" is sometimes understood as a private loan that can be used for investment. We repay the debt to the bank, we keep the rest for ourselves. Is it worth it? In the mid-2000s, when the Russian market grew by an average of tens of percent per annum, such tactics could work. However, the average stock market returns are below investment loan rates, which was confirmed after a year: it took the Russian market eight years to reach pre-crisis highs.
There are many sources of financial support for individuals and entrepreneurs. Someone applies to a bank or an MFI (microfinance organization), it is convenient for someone to get a loan from an investment company. What is this direction and how it differs from the others proposed - we will consider below.
Lending from an investment company
Financial difficulties are solved in two ways. Own reserves are sought, which can be a permanent income or a pre-deferred part of the profits received, or the applicant applies for third-party funding. You can receive money in various ways, it all depends on several factors:
- the amount of funds needed;
- the term for which the loan is taken;
- Supporting documentation;
- creditor's requirements.
As for the last point, the methods differ here. Banks carefully select potential customers, therefore obtaining a loan by this method is accompanied by significant difficulties.
If a person (or an entrepreneur) cared enough about his financial affairs, carried out transactions without delay all the time, paid the required interest, the bank would be happy to cooperate with him. However, many citizens of the Russian Federation cannot say with certainty that their credit history is good enough to apply to a bank. What else can await a person with this method of financing?
To get a loan in the banking sector, you must comply with a number of formalities. Firstly, the applicant will be checked for his past financial life and current solvency. All previous credit events involving the person will be checked, as well as his reaction to complications. If there are entries of a negative nature - overdue payments, debts, etc., then the bank will treat the applicant with coolness.
Secondly, some mandatory things, such as permanent employment and income in the right amount, will increase the applicant's chances of obtaining a loan. The bank calculates in advance the options under which a person will not be able to repay the loan. If the applicant works seasonally or his income is below a certain minimum, it makes no sense to count on receiving financial assistance.
It's easier to go the other way to get third-party funds. In this case, a less demanding MFI or a loan from an investment company will do.
The only downside to a relationship of this nature is the interest rate. By issuing small amounts, companies are insured at the expense of high percentages of default. True, the requirements for the applicant here are minimal.
There are many more undeniable advantages:
- the age of the applied citizen is between eighteen and seventy;
- round the clock access;
- the ability to work remotely, without visiting a representative office;
- receiving funds to a card of any bank, or an electronic wallet;
- clearance is fast paced;
- proof of employment and income is not required;
- there is no need to involve guarantors.
The list can be long enough. However, there is another significant point that can be attributed to the negative. The amounts manipulated by MFIs often do not exceed several tens of thousands. There are companies that give out large amounts, but they have to use collateral.
Otherwise, receiving financial assistance from MFIs looks promising, especially in terms of credit history. Often citizens resort to the following: they take and repay small loans in order to create positive records in their credit history. Consider another way of obtaining a cash loan, which has the parameters of both of the above methods, and takes mostly the best features.
Online loan from an investment company
Many companies are making various financial efforts to increase their own cash flows. Investing in various projects, including co-financing, is quite a profitable undertaking. Large and small investment funds offer loans on conditions almost identical to those offered by MFIs, while:
- loans are offered at a lower rate;
- financial support is stable;
- accompanying documentation is also small.
It is convenient for companies to invest their own money in lending, especially when it comes to investing in small businesses. Sole proprietors can borrow large sums, leaving their real estate as collateral, or arrange loans under the guarantee of their own business.
Investment companies are not bound by the regulations of banks, therefore they can offer favorable conditions, while remaining in abundance. An individual approach to each appeal allows investors to attract more and more new customers.
What needs to be done to get a loan from an investment company? You can refer to the global network to find relevant portals that collect and disseminate information about such investment projects. In such a place, it is easier to compare the proposed product according to certain parameters:
- interest rate;
- duration of the agreement and possibility;
- georeferencing;
- the possibility of receiving funds in various ways;
- documentation required to conclude an agreement.
The amounts manipulated by investors are large enough to cover the need not only for private applications, but also for requests from individual entrepreneurs. Small business receives support, and the investor - the opportunity to earn on their capital.
When seeking financial assistance, there are several factors to consider. If a person is not in a hurry and can wait a few days, then you should contact the bank, where they will conduct appropriate checks on his solvency and provide him with a loan.
If this appeal fails, you should not be upset, because going to an MFI or to investors is the same usual way to find finance. At the same time, one should not forget about the rate set by microlenders and the rather small amounts that they manipulate.
When it comes to a stable deal with good characteristics, you can pay attention to investors. Many companies operating in the financial market offer their services on fairly loyal terms. Getting a loan from an investment company sometimes looks like the most profitable event.
Investment loan
Today there is such a thing as an investment loan. Its essence is to borrow the necessary amount of money in order to invest in a project. This may be the opening of a factory or some enterprise.
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The process of obtaining an investment loan can hardly be called easy. The relationship between the lender and the borrower requires a certain knowledge base. Especially, it concerns the borrower.
The loan agreement concluded when obtaining an investment loan has some features that you should pay attention to.
The amounts that are available when obtaining an investment loan are far from small, and therefore the terms are correspondingly large.
The borrower must be in an ideal financial position and the project must be competitive. Otherwise, the financial institution will simply refuse to issue this loan.
What it is
An investment loan is a long-term target loan that is issued for a specific program.
This loan has the following features:
- in this situation, the bank acts as an investor, which takes on a large share of the risks;
- such a loan can only be issued to a borrower with practical experience in building a business;
- collateral for the loan must be guaranteed by the liquid probable borrower;
- With this loan, a legal entity can finance current purposes.
In most situations, an investment loan is issued for a long time, so that the organization can fully implement the planned changes and achieve the intended results.
At the same time, banking organizations often meet businessmen halfway and allow them to choose the optimal lending conditions.
It should be noted that for a banking organization this type of lending is considered risky, because in this case, the future business is financed, which relies only on prospects.
Based on this, credit institutions impose rather stringent requirements on potential borrowers, and the cost is often more expensive than with conventional lending.
To be as savvy as possible in credit and financial matters, you need to understand the basic concepts. Considering that we are talking about investment lending, we need knowledge related directly to this type of loan.
Making such a loan, one way or another, implies that the client must be literate and financially savvy. After all, to open your own business, you need the necessary baggage of economic knowledge and entrepreneurial acumen.
Key Concepts
So, the most important thing a borrower should know about is this. This term refers to the process of transferring money or other material resources for temporary use.
Participants in the process are two parties - lending (creditor) and credited (borrower, debtor).
The lending party assumes the obligation to repay the loan with the payment of interest within a clearly defined time period.
If this does not happen, the borrower is obliged to incur civil law, and in some cases criminal law.
All the rules that both parties must follow are found in the loan agreement. This document is considered fundamental in the lending process.
A loan agreement, in fact, means an agreement between the two parties, according to which the lender must lend money to the borrower in the amount and on the terms specified in the agreement, and the borrower must return the money received and interest to the bank for their use.
This loan is considered targeted and is intended for the development of the following organizations:
- medium and small businesses;
- trading companies;
- agricultural and other institutions;
- large manufacturing firms.
Also, an investment loan allows you to purchase and implement:
- commercial real estate;
- or other equipment necessary for the development of the enterprise;
- repair of office, industrial premises and laboratories;
- introduction of more modern technologies.
Also, such a loan allows you to issue loans in another financial institution. All investment loans can be divided into three types:
Investment loans are also divided into types, depending on who and for what it is provided.
Allocate bank (which in turn have one-time loans, credit lines and underwriting), government (leasing) loans and bond issues. It is bank loans that are most often issued by borrowers.
A one-time credit line implies instant crediting of the entire amount to the client, the payment of which occurs monthly annuity, in equal installments (the amount of debt and interest are paid separately) and according to an individually set loan repayment schedule.
A line of credit allows you to borrow money only when you need it (using a credit card). Underwriting allows you to get the necessary amount of money through the redemption of bonds.
The legislative framework
Lending is considered one of those activities that are strictly controlled by law.
All the basic rules for conducting this financial transaction, as well as the rights and obligations of the participants in such a transaction, are spelled out in the relevant regulatory legal acts.
Some dishonest financial institutions do not adhere to the articles, thereby deceiving the borrower and requiring him to perform actions that are not provided for by law.
The Civil Code of the Russian Federation dated November 30, 1994 is considered fundamental for lending in Russia.
All banks, microfinance companies and other credit organizations, without exception, are guided by it.
Seventeen articles of this code contain everything that plays an important role in obtaining loans, from the conditions for issuing a loan to information about liability in case of violation of the rules of the contract.
Federal laws should also not be ignored:
Federal Law "On Consumer Credit" dated December 21, 2013 No. 353-FZ regulates relations that arise in connection with the provision of a loan to an individual for purposes not related to entrepreneurship, on the basis of a loan agreement.
The loan agreement consists of general and individual conditions. The agreement is drawn up in writing and contains all the terms of the loan.
How to get a bank investment loan
Not every borrower can apply to a financial institution in order to obtain an investment loan.
This is due to the fact that only an experienced person in doing business can get an investment loan. An investment loan implies a fairly large cash loan with a long repayment period.
A client wishing to receive such a loan must unquestioningly comply with the following requirements:
- be in business for at least one year;
- the organization must be located in the region where the lending institution is located;
- obligatory condition of contribution in the form of own or other or property.
At the same time, the borrower must be an adult citizen of the Russian Federation, have a stable source of income and a clean credit history.
A distinctive feature of investment lending is the verification of not only the client himself, but also his project, in which he wants to invest money. First of all, its competitiveness is evaluated.
Different financial institutions issue investment loans on terms that differ from each other. But it is possible to form general conditions for issuing such loans.
General conditions for issuing investment loans:
The correctness of the contract
Drawing up an agreement when receiving an investment loan differs from a loan agreement concluded when receiving any other loan.
This is due to the fact that this type of lending includes many complexities that need to be paid special attention to.
The agreement signed by the participants in the process must necessarily consist of clauses on the provision of a loan, on the deduction of interest for the use of a loan product and on the loan period.
Also, it must contain information on the options and terms of payment, on the conditions for the implementation of the contract, on the responsibility of the parties, on documents confirming the pledge, and.
Violation of such an agreement, as well as a standard loan agreement, threatens with serious consequences for both parties. Therefore, it is necessary to closely monitor the fulfillment of credit conditions, in particular the repayment periods.
Required documents for the borrower
The requirements for a package of documents for obtaining an investment loan are also much stricter than when applying for a standard loan. It is very important to provide not only the necessary paperwork, but also a properly developed business plan.
It must prove the competitiveness of this project. Many banks make decisions based specifically on.
But this does not mean at all that a business plan is the only document that must be presented to a financial institution.
You must also provide for an investment loan indicating:
- the amount of the loan;
- certificate of registered company;
- accounting report on the activities of the company for the last time;
- photocopies of passports of the borrower and all those involved in the project (in particular, the chief accountant);
- a paper confirming the right to conduct business;
- founding documents.
Some banking institutions may ask for additional papers at their discretion.
Evgeny Malyar
bsadsensedynamick
#
Business loans
Investment loan: risks and rewards
Since the basis for issuing a loan is a business project, the bank actually shares potential risks with the borrower.
Article navigation
- Three types of investment loans
- expansionary
- Project
- Building
- Requirements for an applicant for an investment loan
- Forms of investment lending
- Calculation of project profitability, payback period and investment loan parameters
- Simplified calculation example
- Conclusion
Probably every business owner has ideas about how to increase profits. The implementation of a large-scale project requires investment. The most common solution to this problem involves external lending. Investment loans pursue the main goal - bringing the enterprise to a new level of development. An article about their essence, features, shortcomings, who can access a loan for investment purposes and how to get it.
Three types of investment loans
An investment loan is a special type of banking product, characterized in that the person applying for it has a well-developed project for the use of borrowed funds.
An investment loan has special features:
- Long term repayment. For the most part, investments do not imply instant returns. For the full implementation of a strategic project, a certain time is required, which is reflected in the business plan (project).
- Target orientation. Investment involves the investment of capital in a specific project that requires financing. This type of allocation of funds involves not only the expansion of activities, but also its qualitative change for the better.
- Scale. It is impossible to get a bank loan for a small amount, justifying the need for it with investment considerations.
The project should include three main sections:
- analysis of the current financial condition of an enterprise applying for investment lending;
- the essence of the project (its economic meaning);
- calculation of the predicted profitability after the implementation of the investment project.
Based on the nature of the intended use of the loan, it is determined that it belongs to one of the three main types.
expansionary
Designed to expand the scale of an existing enterprise. Tasks solved by the company with the help of an expansionary investment loan:
- opening of new branches;
- purchase of additional technological equipment;
- modernization of fixed assets;
- other similar purposes.
The peculiarity of its receipt is that until the debt is paid off, the effect of improving the financial performance of the enterprise should not be calculated. All the additional profit brought by modernization (and in some cases a large amount) will go to settlements with the bank.
When applying for an expansion loan, forecasts are based on the most pessimistic scenarios for the development of further events. Ultimately, only the bankruptcy of an enterprise can hinder the fulfillment of the payment schedule. If it is assessed as probable, the loan will simply not be issued. In the best case, the interest will be set at the maximum level.
Project
Bank risks in this type of investment lending are initially the highest. Project lending provides for the development of one of the directions, separate from the main activity carried out by the enterprise at the time of application. The leaders of the company acting as a probable debtor hope to significantly increase the profitability of the business after the implementation of the plan.
Financing investment projects is always an adventurous business. The bank's income is formed only by the profitability of the new direction. The credited enterprise simply will not be able to fulfill its obligations under the contract if the project does not give the expected effect.
Building
An enterprise can apply to a bank with an application for a construction and investment loan only after it has incurred certain and considerable costs. This feature is due to the specifics of the activity for the construction of real estate. Negotiations are possible if the prospective developer already owns the relevant piece of land or has issued a long-term lease on it.
In addition to the areas, the applicant will have to present design and estimate documentation, the development of which costs a lot of money. Of course, a building permit is required.
The probability of refusal when applying for a construction and investment loan is low, but it is available only to enterprises with high financial potential. The decision on approval and conditions is made by the bank based on the type of facility being built and an assessment (again, pessimistic) of its likely profitability.
Requirements for an applicant for an investment loan
The standard criteria by which a bank makes ordinary financial borrowing are in this case supplemented by some specific requirements.
Investment loans for small businesses are often a way to reach a medium or even high level of business activity, but it is not easy to overcome the boundaries separating an individual entrepreneur from an LLC.
Since we are not talking about small amounts in this case, the need for a clear and convincing business plan that reveals the purpose of the project comes first. In addition, the following developments are needed:
- Marketing analysis, proving the possibility of implementing a business plan.
- Contracts with partner firms capable of providing the technical feasibility of translating the idea into reality.
- Availability of free working capital, allowing to bear operating expenses and repay current costs. This is the so-called down payment (from a quarter to a half of all planned costs).
- Possession of collateral (security) property in personal ownership or as part of the founding capital. It is subject to standard requirements: trouble-free liquidity and a market value that exceeds the amount of debt.
- It is desirable that the entrepreneur has already implemented at least one investment project - this experience may affect the favorable decision and the terms of the loan.
The features of investment loans include a repayment period that almost never exceeds ten years. One should also take into account the cautious attitude of the bank to applications for project refinancing. If the debtor failed to pay off the primary loan, then the estimated profitability as a result did not live up to expectations. At least, that is the conclusion.
Forms of investment lending
According to the source of financing, investment loans are represented by five main forms:
This brief table requires some explanation, indicating the specifics, advantages and disadvantages of each form of investment lending.
A bank investment loan is the most commonly practiced form of capital raising. Availability works in its favor first of all. As the name implies, it is provided to the borrower in commercial banks subject to the conditions described above.
In turn, it has several varieties, determined by the terms of contracts and other conditions:
- urgent for an entrepreneur;
- revolving (credit line);
- design;
- underwriting.
Of these categories, only the concept of "underwriting" needs comments. It is similar to the bond form, but in this case, the creditor bank acts as the buyer of securities. Of course, only consistently high characteristics of issued bonds can induce such actions.
Investment lending by the development bank, that is, in fact, by the state, is made when the project is of priority importance for the country's economy. Conditions are usually preferential, but they still need to be earned. The objects of public investment are projects that meet high requirements, including:
- progressive technology, confirmed by state expertise;
- ecological cleanliness;
- payback within five years or faster;
- standardization of construction (commissioning) terms;
- compliance with the tasks of social, economic (including foreign trade) significance facing the country.
In other words, if as a result of the implementation of the project in Russia the production of a product based on modern technology without harm to the environment, which is in demand in the domestic and foreign markets, is started, then one can count on state investment.
The requirements for foreign investors attracted as part of international investment are very high. However, there are several effective ways to interest foreign entrepreneurs in investing in domestic production. Among them are a favorable tax climate, highly qualified labor resources and other advantages of the Russian economy. The main "trump card" is a tempting project that promises high profits.
A synonym for the term "commodity form of investment" is the word "leasing". By providing an enterprise with a fixed asset on the basis of a financial lease, the lessor creates conditions for the growth of labor productivity, improving the quality and all indicators of the enterprise.
Leasing can be financial and operational, direct and reverse. This method of economic borrowing, and in fact, investment, deserves a separate detailed description.
Finally, the fifth and last method of attracting investment lending is the issuance (issue) of securities, namely, bonds that guarantee a stable income in the form of interest. In this they differ from shares, the value of which depends on stock quotes and the success of the financial performance of the issuing enterprise.
The advantage of issuing bonds for an enterprise is that the investment is made directly from the buyer of the security. The bank, before issuing a loan amount, must first find it, attracting depositors with interest on the deposit.
There are also difficulties. The main one is the search for those who want to buy bonds. This is not easy: each acquirer must be convinced that the project will be profitable.
Calculation of project profitability, payback period and investment loan parameters
You should immediately accept the fact that it is impossible to predict the economic effect of the implementation of almost any project with 100% accuracy and reliability. This, however, does not mean the meaninglessness of the very preparation of a business plan. The maturity and interest of an investment loan always depend on how convincing the applicant's arguments are.
A common method used by banks is to draw analogies between design parameters and the known characteristics of existing counterparts. If the introduction of some equipment brought a certain enterprise a monthly additional income, for example, 100 thousand rubles, and all other conditions (location, form of ownership, turnover, etc.) are approximately equivalent, then we can assume the same effect after the investment.
Another forecasting method is based on the calculation of the ROI. Its disadvantage is in direct proportion to the difficulties associated with determining the expected profit. The calculation formula is as follows:
Where:
ROI- indicator of return on investment;
VP- gross revenue for the conditional reporting period;
VD- gross cost for the conditional reporting period;
VI- the amount of investment.
Everything is clear here: the ROI indicator shows how much profit each ruble invested in the project brings. Questions arise later.
Gross revenue VD is formed by the unit price of the product and the sales quantity. If an entrepreneur who wants to get an investment loan claims that he will sell each copy at a price of, for example, 100 rubles, and its cost will be 60 rubles, then it may make sense for him to believe. Doubts arise when determining the market capacity, which can be determined by conducting large-scale marketing research or experimentally, that is, after the fact.
The slowdown in sales leads to a decrease in the capital turnover ratio, and, as a result, to a deterioration in real financial indicators in comparison with the planned values. Based on this, banks, as a rule, reduce their forecasts to a reasonably pessimistic level when establishing a payback period and profitability. Accordingly, these indicators affect the term of the contract and the interest rate.
Simplified calculation example
After the commissioning of a new technological line, the Rassvet enterprise will introduce a new product, Rosinka, to the market.
- The projected sales volume will be 50 thousand units. per month.
- The unit cost is 60 rubles.
- Selling price - 96 rubles.
- The cost of the line is 22 million rubles.
Rassvet has its own funds in the amount of 2 million 400 thousand rubles, and intends to spend this money on the purchase of this equipment.
The required amount of investment credit is 19 million 600 thousand rubles.
The business plan states that with these characteristics, the monthly income will be:
Using the tax calculator, you can calculate that with expenses for:
- Salary 70 thousand / month.
- Current production and operating costs - 10 thousand / month.
- Depreciation - 916,667 rubles / month.
- Other costs - 5 thousand rubles,
the amount of monthly profit remaining for business development after taxes will be 629,651 thousand rubles.
The payback period of the investment To will be:
The concept and purpose of investment lending
Definition 1
An investment loan is a type of banking service based on the provision of a loan aimed at optimizing existing business areas, expanding them or implementing a new project.
The following factors contribute to the growth in popularity of this type of lending:
- for borrowers, this is a relatively low interest rate, a long repayment period (loan terms can exceed ten years);
- for creditors - a relatively low level of transaction risk, based on the fact that the repayment of the loan provides the property of the enterprise.
Remark 1
Investment lending is an affordable and relatively inexpensive way to improve performance and upgrade equipment.
Over time, investment lending goes beyond enterprises, extending its action to individual entrepreneurs and even individuals who are about to start their own business.
Investment credit is the most important tool for the implementation of state support for small and medium-sized businesses, which determines their provision by banks with a high share of state capital. Most commercial banks avoid this type of lending due to the long period of lending, which reduces the profitability of the loan.
Distinctive characteristics of an investment loan
The salient features of an investment loan include:
- Firstly, when providing other types of loans, the object of study by banks is the borrowers, their financial position and solvency, in the case of investment lending, more attention is paid to the characteristics of the investment project to be financed. Often, the content of such a document as a feasibility study of the project has the greatest influence on the decision to grant a loan of this type;
- secondly, the investment loan provides for some restrictions for the bank, which are expressed in the fact that the interest rate on the loan cannot exceed the profitability of the investment project as a whole, and the loan period must be longer than the payback period of the project. These restrictions increase the rigor of banks in the selection of financed investment projects;
- thirdly, the repayment of an investment loan may include a certain grace period, during which only the interest on the loan is repaid, while the principal part of the debt remains unchanged. Full repayment of the loan begins from the moment the facility is put into operation;
- fourthly, the intended purpose of investment lending, in which funds can only be directed to the reconstruction or modernization of existing enterprises, or the technical equipment of new ones. The intended use of the loan is strictly monitored by lenders. Often, credit institutions reserve the right to bank support of the transaction, which allows more complete control over the spending of funds.
Types and forms of investment loan
There are several types of investment loans.
Project loans when the loan is provided for the implementation of a new project, the profitability of which is determined taking into account payments on the loan;
Expansion loans when lending is carried out in relation to an operating enterprise in need of expansion, reconstruction, modernization;
Construction loans when lending is carried out in relation to construction organizations. This type is distinguished due to the fact that construction projects require a significantly larger amount of documentation.
Investment loans are divided into the following forms: bank investment loans, government investment loans; commodity investment credits (leasing); issue of bonds.
Bank investment loans have several subspecies. Let's characterize the main ones.
One-time- these are loans that provide for a one-time transfer of loan funds to the borrower's personal account and monthly collection of interest from it; repayment of the main loan dog can be carried out in various ways: annuity, when the payment amount is determined in advance and is not subject to change; in equal tranches, when repayment of principal and interest are not related to each other; individual, when an individual principal repayment scheme is provided for a particular borrower. this subtype of bank investment lending is the simplest and most common;
Credit lines- these are loans that provide for the borrower to receive the necessary amounts not on a regular basis, but at the moment when he needs it. A credit line implies the following varieties: simple, in which the borrower uses all the allocated funds at a time; revolving, when the borrower periodically repays the existing debt and borrows money again; on-call, when a certain limit is set for the borrower, within which he independently determines the period for receiving or repaying funds; current account, when a specialized bank account is opened for the borrower, upon receipt of funds to which they are automatically used to repay the loan;
underwriting- these are loans in which the borrower receives funds through the repurchase by the bank of the bonds issued by him;
Conditions for obtaining an investment loan
Remark 2
The main requirement for a client who expects to receive an investment loan is the availability of a feasibility study of a real and feasible investment project, as well as a business plan.
Obtaining an investment loan for innovative projects is hampered by the conservative attitude of banks to everything new.
These documents must contain information about the activities of the organization (if it already exists) for at least the last three years, a description of the credit history, a description of investments of own funds, as well as a number of organizational documents, starting with an application for a loan and ending with a certificate of state registration.