Self liquidating project loans

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This type of financing is usually for large, complex and big-ticket projects.

It is principally a form of ‘Non-Recourse’ or ‘Limited Recourse’ financing, whereby the bank bases its credit decision solely or primarily on the cash flows of the project, with respect to repayment of the project debts.

Cash receipts include: i) receipts from sales or disposals of fixed assets (or current asset investments) ii) receipts from sales of investments in subsidiary undertakings net of any cash or cash equivalents transferred as part of the sale iii) receipts from sales of investments in other entities iv) receipts from repayment or sales of loans made to other entities.i) payments to acquire fixed assets ii) payments to acquire investments in subsidiary net of balances of cash and cash equivalents acquired iii) payments to acquire investments in other entities iv) loans made and payments to acquire debt of other entities.

Prepare a cash flow statement for the year to 31 December 19X5.

Object Finance Object Finance is a method of funding the acquisition of physical assets (e.g., ships, aircraft, fleets, etc.) where the repayment of the exposure is dependent on the cash flows generated by the specific assets that have been financed and pledged or assigned to the lender.

Margin loan Margin Loan is a loan that allows the customer to finance against shares.The term margin refers to the difference between the market value and the cost of the shares.The primary and secondary sources of repayment are from the sale of the securities purchased.The chapter develops the concept of cash flow and then shows how the funds can be used in the business.Funds are not only generated internally; they may be externally generated, and so the chapter finishes with a discussion of externally generated funds.

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