RAJESH SHARMA

MBA 0741
Working Capital Advances

Working capital advance by

commercial banks represents the
most important source for financing
current assets.
 Forms of Bank Finance

Cash Credits / Overdrafts

Loans
Discount of Bills
Letter of credit.
 For Getting Advances

Customer have to submit application

& bank processing
Sanction & term and conditions
Security
Margin amount
 Miscellaneous Sources of
Finance
Deferred Credit
Lease & Hire Purchase
Unsecured Loan & Deposit
Special Schemes of Institution
Subsidies & Sales Tax Deferments and
Exemptions
Short Term Loan from Financial Institutions
Commercial Paper
Factoring
Securitization
 Raising Venture Capital
Preparing a Business Plan:-
If you are approaching a venture capitalist to
finance your project then:
Use simple & clear language
Focus on People, Product, Market & Condition
Identify risk & develop a strategy to cope with
the same
Convince them that the management team is
talented, experienced and committed
Raising Capital in International
Market
(a) Euromarkets:-
Eurocurrency Loans
Eurocurrency Bonds
Global Depositary Receipts
(b) Foreign Domestic Markets:-
US Capital Market
Other Markets
 Export Credit Scheme
Buyer’s Credit
Supplier’s Credit
Salient features of Export Credit Agencies:-
Finance is tied to import of goods &
services
Up to 85% of value of imports is available
as finance
Finance is available for long tenors at
reasonable cost
Export credit agencies insist on a bank
guarantee
 Project Financing Structures

1. Full Recourse Structure

2. Limited Recourse Structure
 Financial Closure

Financial closure means that the source of

fund required for the project have been
tied up. Financial closure may take a long
time, particularly for infrastructure
projects, because several things have to
be sorted out to make the project
structure fundable.
Financial Closure is achieved soon when:-
Suitable credit enhancement is done to the
satisfaction of lenders.
Adequate underwriting arrangements are made for
market-related offerings.
The resourcefulness o promoters is well established.
The process is started early and concurrent
appraisal initiated if several lending agencies are
involved.