Internal financing channel of project financing channel
Internal financing channels of enterprises refer to opening up sources of funds from within enterprises. There are three sources of funds within an enterprise: its own funds, its tax interest and interest payable, and its unused or undistributed special funds. Generally, in enterprise mergers and acquisitions, enterprises choose this channel as much as possible, because this method has good confidentiality and enterprises do not have to pay the borrowing cost, so the risk is very small, but the amount of funds is related to the profits of enterprises.
External financing channels
External financing channels refer to the sources of funds opened by enterprises from the outside, mainly including: professional bank credit funds, non-bank financial institutions' funds, other enterprises' funds, private funds and foreign capital. Raising funds from outside the enterprise has the advantages of high speed, great flexibility and large amount of funds, and is generally the main source of raising funds in the process of mergers and acquisitions. However, its disadvantage is poor confidentiality, and enterprises need to bear high costs, resulting in high risks, which should be paid attention to during use.
Loan financing mainly refers to financing by financial institutions (such as banks), and its cost is mainly interest liabilities. Bank loan interest can generally offset corporate pre-tax profits, thus reducing corporate income tax. There is a lot of room for financing from non-financial institutions and enterprises, but due to relatively low transparency, the state has quota control. From the perspective of tax planning, enterprise lending, that is, capital lending between enterprises, has the best effect. Issuing bonds and stocks to the society belongs to direct financing, which avoids the interest expenses of middlemen. Because loan interest and bond interest can be used as financial expenses, that is, part of enterprise costs, to deduct pre-tax profits and reduce the income tax base, and dividend distribution should be carried out after the enterprise pays taxes, dividend payment has no expense deduction problem, which relatively increases the tax cost. Therefore, under normal circumstances, the tax burden borne by enterprises to raise funds by issuing common shares is heavier than that borne by borrowing from banks, and the tax burden borne by borrowing funds is heavier than that borne by issuing bonds to the society. Individual income tax is not required to be paid in the form of internal fund-raising and shareholding. Generally speaking, the tax burden borne by enterprises in self-accumulation mode is heavier than that borne by loans from financial institutions, while the tax burden borne by loan financing mode is heavier than that borne by financing modes such as borrowing, and the tax burden borne by inter-enterprise borrowing mode is heavier than that borne by enterprises in raising funds for shares.
In the negotiation stage of project financing, the financing consultant will contact banks and other financial institutions on behalf of investors to provide project information and financing feasibility study report. After on-site investigation, due diligence and several rounds of negotiations, the lending bank will draft relevant financing documents with investors. At the same time, investors also need to sign relevant sales agreements, guarantee agreements and other documents according to the requirements of banks. The whole process needs repeated negotiations, which not only protects the interests of investors to the greatest extent, but also can be accepted by lending banks.
In the financing implementation stage
As the financing bank bears the project risk, it will strengthen the supervision of the project implementation process. Usually, the loan bank will supervise the progress of the project, participate in the decision-making procedures of some projects according to the provisions of the financing documents, and manage and control the loan capital investment and cash flow of the project. Through the participation of banks, to some extent, it will also help project investors to strengthen the control and management of project risks, so that all parties involved can share the risks and enjoy the benefits.
With the acceleration of the pace of domestic resource enterprises going abroad, the advantages of diversified financing and risk sharing of project financing are becoming more and more obvious. Therefore, it is necessary for enterprises to understand the characteristics and advantages of project financing as soon as possible, and constantly explore and master the process and steps of project financing, so as to improve the financing ability of enterprises and obtain financial guarantee for the smooth development and rapid development of overseas mineral resources.
The application condition for project financing is 1. The project itself has been approved by government departments.
2. The project feasibility study report and project design budget have been reviewed and approved by relevant government departments.
3. Introduce foreign technology, equipment and patents. It has been approved by the government's economic and trade department and has gone through relevant procedures.
4. The technical equipment of the project products is advanced and applicable, with complete supporting facilities and clear technical support.
5. The production scale of the project is reasonable.
6. It is estimated that the project products have good market prospects and development potential and strong profitability.
7. The investment cost and expenses of the project are predicted reasonably.
8. The raw materials required for the production of the project have a stable source, and a supply contract or letter of intent has been signed.
9. The project construction site and construction land have been implemented.
10, water, electricity, communication and other supporting facilities required for project construction and production have been implemented.
1 1. The project has good economic and social benefits.
12. Other construction conditions related to the project have been implemented.